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 1950’s Economic Stabilization 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 1972 Production of B/W TV sets began 1992 Company ranked world’s top DRAM supplier 1969 Company established 1980 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 2004 S-LCD Corp., LCD joint venture with Sony established World’s 1st to develop and demonstrate Mobile WiMAX 2002 Production using 300mm wafer and 90nm processing technology started 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 1997 Worldwide Olympic Partner contract signed 2003 Company 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 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.

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

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

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

Financial Performance Strong revenue growth Revenue Net Income (Consolidated basis) (Consolidated basis) (Billion US Dollars) (Billion US Dollars) $8.5 $8.3 $7.9 $7.5 $4.4 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

Financial Overview

Financial Overview

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 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.Lay off 30,000 employees 2.Close down some of Samsungs factories for 2 month 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 LCD Display Big Screen TVs DVD-VCR Combos Projection TVs 2 DVD Players Laser Printers Mobile Phones Microwave Ovens 3 Plasma TVs 4 Camcorders

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

R&D Commitment (as a % of parent company sales) Technological Competitiveness Innovating technologies by sustaining investment in R&D Investment in R&D (Billion US Dollars) 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

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