SAMSUNG ELECTRONICS

Seoul, Korea

Ali Soltani Spring 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

History

1969 1972 Production of B/W TV sets began Company established 1980 1992 Company ranked world’s top DRAM supplier Korea Telecommunications Corp. acquired 1995 TFT-LCD mass production began 1974 Wafer fabrication started 1988 Samsung Semiconductor & Telecommunications merged with Samsung Electronics Co.

1994 256Mb DRAM developed 1996 CDMA cellular services commercialized

History

1997 2002 Production using 300mm wafer and 90nm processing technology started Worldwide Olympic Partner contract signed   2004 S-LCD Corp., LCD joint venture with Sony established World’s 1st to develop and demonstrate Mobile WiMAX 2003 Company became leader in flash memory 2006  World’s 1st Blu-ray Player launched  World’s 1st 50nm 1Gb DDR2 DRAM developed 2007 World’s 1st 64Gb NAND flash memory developed 1999  World’s 1st to offer full line up of digital TVs  Developed watch phone, MP3 phone and TV phone 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.

Global Network

66 Countries

June 2010 Manufacturing Subsidiaries Sales Subsidiaries Distribution Centers Design Centers R&D Centers Branch Offices and Other Total Facilities and Offices 33 50 20 81 2 7 193

Samsung Today Leader in semiconductor, telecommunication and digital convergence technologies 193 offices and facilities in 66 countries and 174,000 employees worldwide Named one of World’s 50 Most Admired Companies by Fortune Magazine Worldwide Olympic Partner since 1997 Ranked 4th globally and 1st in Asia among corporations on the Carbon Disclosure Leadership Index Selected for the Dow Jones Sustainability Index Second biggest US patent winner in 2009 (IFI) Net Sales (2009): US$116.8 billion Net Income (2009): US$8.3 billion 19th in BusinessWeek/Interbrand’s 100 Best Global Brands

Business Units Visual Display Mobile Communications Telecom Systems IT Solutions Digital Appliances Semiconductor LCD Digital Imaging | 9

Financial Performance Strong revenue growth Revenue (Consolidated basis) (Billion US Dollars)

$92.0

$105.0

$96.5

$116.8

$79.6

$7.5

Net Income (Consolidated basis) (Billion US Dollars) $8.5

$8.3

$7.9

$4.4

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

Financial Overview

Net Sales Dollars in Bilions

16 14 12 10 8 6 4 2 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Financial Overview

Net Income Dollars in Bilions

16 14 12 10 8 6 4 2 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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  Weaknesses  Low-price and down-market image    Its capital eroded by the Asian financial crisis in 1997 Distribution via discount chain at very low price Communication messages were not consistent due to using so many advertising agencies with 20 slogans more than

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.

2.

1.Lay off 30,000 employees 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

Memory Chips Computer Monitor LCD Display Big Screen TVs DVD-VCR Combos Projection TVs DVD Players Laser Printers Mobile Phones Microwave Ovens Plasma TVs Camcorders

Market Rank

1 1 1 1 1 2 2 2 2 3 4 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

Technological Competitiveness Innovating technologies by sustaining investment in R&D

$5.3

$6.0

Investment in R&D

(Billion US Dollars)

$6.3

$6.2

$5.5

$7.5

R&D Commitment

(as a % of parent company sales)

2005 2006 2007 2008 2009

Culture

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

Thank you