SAMSUNG ELECTRONICSSeoul, Korea

Ali SoltaniSpring 2011

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

• 1950’s Economic Stabilization– Korean War - Samsung lost all assets– aimed to help rebuild Korean economy; entered the

manufacturing industry (sugar, fabrics)– became a leader in modern business practices (recruiting

from outside)

• 1960’s Expansion of Key Industries– entered electronics and chemical industries– 1969 established Samsung Electronics Co.

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

HistoryHistory

1969Company established

1969Company established

1980Korea Telecommunications Corp. acquired

1980Korea Telecommunications Corp. acquired

1972Production of B/W TV sets began

1972Production of B/W TV sets began

1995TFT-LCD mass production began

1995TFT-LCD mass production began

1992Company ranked world’s top DRAM supplier

1992Company ranked world’s top DRAM supplier

1974Wafer fabrication started

1974Wafer fabrication started

1988Samsung Semiconductor & Telecommunications merged with Samsung Electronics Co.

1988Samsung Semiconductor & Telecommunications merged with Samsung Electronics Co.

1994256Mb DRAMdeveloped

1994256Mb DRAMdeveloped

1996CDMA cellular services commercialized

1996CDMA cellular services commercialized

HistoryHistory

2004 S-LCD Corp., LCD joint venture with Sony established World’s 1st to develop and demonstrate Mobile WiMAX

2004 S-LCD Corp., LCD joint venture with Sony established World’s 1st to develop and demonstrate Mobile WiMAX

1997Worldwide Olympic Partner contract signed

1997Worldwide Olympic Partner contract signed

2002Production using 300mm wafer and 90nm processing technology started

2002Production using 300mm wafer and 90nm processing technology started

2003Company became leader in flash memory

2003Company became leader in flash memory

1999 World’s 1st to offer full line-

up of digital TVs Developed watch phone,

MP3 phone and TV phone

1999 World’s 1st to offer full line-

up of digital TVs Developed watch phone,

MP3 phone and TV phone

2006 World’s 1st Blu-ray

Player launched World’s 1st 50nm

1Gb DDR2 DRAM developed

2006 World’s 1st Blu-ray

Player launched World’s 1st 50nm

1Gb DDR2 DRAM developed

2007World’s 1st 64Gb NAND flash memory developed

2007World’s 1st 64Gb NAND flash memory developed

2005 World’s 1st Satellite

and Terrestrial DMB terminals launched

World’s 1st 102”PDP TV, 82”LCD TV, and 71” DLP™ TV developed

2005 World’s 1st Satellite

and Terrestrial DMB terminals launched

World’s 1st 102”PDP TV, 82”LCD TV, and 71” DLP™ TV developed

2009 ~ 2010 Reorganized into stand-alone businesses Acquired Samsung Digital Imaging Co.

2009 ~ 2010 Reorganized into stand-alone businesses Acquired Samsung Digital Imaging Co.

June 2010

Manufacturing Subsidiaries 33Sales Subsidiaries 50

Distribution Centers 2Design Centers 7R&D Centers 20Branch Offices and Other 81Total Facilities and Offices 193

Global NetworkGlobal Network

66 Countries66 Countries

Worldwide Olympic Partner since 1997

Leader in semiconductor, telecommunication and digital convergence technologies

193 offices and facilities in 66 countries and 174,000 employees worldwide

Net Sales (2009): US$116.8 billionNet Income (2009): US$8.3 billion

Second biggest US patent winner in 2009 (IFI)

19th in BusinessWeek/Interbrand’s100 Best Global Brands

Samsung TodaySamsung Today

Named one of World’s 50 Most Admired Companies by FortuneMagazine

Selected for the Dow Jones Sustainability Index

Ranked 4th globally and 1st in Asia among corporations on the Carbon Disclosure Leadership Index

| 9

LCDLCD

Business UnitsBusiness Units

Visual DisplayVisual Display

SemiconductorSemiconductorTelecomSystemsTelecomSystems

Digital Appliances

Digital Appliances

IT Solutions

IT Solutions

Mobile Communications

Mobile Communications LCDLCD

DigitalImagingDigital

Imaging

2005 2006 2007 2008 2009

Strong revenue growth

Revenue

(Consolidated basis)

(Billion US Dollars)

Net Income

2005 2006 2007 2008 2009

(Billion US Dollars)

(Consolidated basis)

Financial PerformanceFinancial Performance

$79.6

$92.0

$105.0$96.5

$116.8$7.5

$7.9

$4.4

$8.3$8.5

Financial Overview

Financial Overview

Strategy

Samsung Market Strategy before 1997

Strategy Strengths

Long-time experience in producing technical components and low cost manufactured products for well-known companies.

High –quality products

WeaknessesLow-price and down-market imageIts capital eroded by the Asian financial crisis in 1997Distribution via discount chain at very low priceCommunication messages were not consistent due to

using so many advertising agencies with more than 20 slogans

Strategy

• Opportunities– Development of digital technology– New powerful advertising channel: Internet

• Threats– The global memory chip market dramatically

decreased due to the shrinking demand and excess supply

– Chinese cheap products

Samsung Market Strategy After 1997

Strategy

Digital Vision: “A Company that leads the digital convergence revolution”

SOLUTION:

1.1.Lay off 30,000 employees

2.2.Close down some of Samsungs factories for 2 month

3.3.Sold about $2 billion worth businesses (pager & coffeemaker)

Design

Consumer-brand awareness

Global leader in several products

High price products

Fastest growing brand

Brand value : $ 15 Billion

Hardware

Develop all components used in its own products

Strategy

2000 : design-led management

2001 : design labs : Los Angeles , London

2002 : Usability Laboratory

2003 : 33 awards at top design

2006 : market value rises above $100 billion

2007 : world's second-largest Mobile Phone maker

2008 : take the No.1 spot as the world’s largest technology

company

2009 : Entered the top 10 list in the world’s top 100 global brands

Product Category Market Rank

Memory Chips 1

Computer Monitor 1

LCD Display 1

Big Screen TVs 1

DVD-VCR Combos 1

Projection TVs 2

DVD Players 2

Laser Printers 2

Mobile Phones 2

Microwave Ovens 3

Plasma TVs 4

Camcorders 4

Wow Products

• “We have to combine computers , consumer electronics and communications as Koreans mix their rice with vegetables and meat”

• “We want to be the Mercedes of home electronics”

• “They’ve got the products , a growing reputation as the innovator , and production lines to back that up”

• Creating chief design office

$7.5

$5.3

$6.2$5.5

$6.3$6.0

2005 2006 2007 2008 2009

Investment in R&D

(Billion US Dollars)

Technological CompetitivenessTechnological Competitiveness

R&D Commitment(as a % of parent company sales)

R&D Commitment(as a % of parent company sales)

Innovating technologies by sustaining investment in R&D

Culture

• Entrepreneurial • Profit focused• Decisive• Different from other firms in Korea and within

chaebol

Thank youThank you