SAMSUNG ELECTRONICS Seoul, Korea

1. SAMSUNG ELECTRONICSSeoul, Korea Ali Soltani Spring 2011

2. Agenda • Samsung Group – History & Structure • Samsung Electronics • History • Company Focus • Financial Overview • Strategy • Organizational Structure • Challenges

3. 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.

4. 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

5. History 1972 Production of B/W TV sets began 1992 Company ranked world’s top DRAM supplier 1980 Korea Telecommunications Corp. acquired 1969 Company established 1995 TFT-LCD mass production began 1988 Samsung Semiconductor & Telecommunications merged with Samsung Electronics Co. 1974 Wafer fabrication started 1994 256Mb DRAM developed 1996 CDMA cellular services commercialized

6. 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.

7. June 2010 Global Network 66 Countries 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

8. Samsung Today 193 offices and facilities 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 Selected for the Dow Jones Sustainability Index Worldwide Olympic Partner since 1997 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

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

10. 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

11. Financial Overview

12. Financial Overview

13. Strategy Samsung Market Strategy before 1997

14. 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

15. 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

16. Samsung Market Strategy After 1997

17. 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)

18. 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

19. 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

21. Wow Products

22. “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

25. 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

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

27. Thank you