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Rhee In-yong | Jeong Keum-yong |
Samsung replaced six of seven executives at its future strategy office ― which plays a central role in charting out business strategies and coordinating the interests of group affiliates.
The reshuffle, which was unexpected, is to tackle business uncertainties amid a challenging situation, officials said.
The group transferred experienced communications, legal and human resources executives from the strategy office to the electronics unit, the group's main cash cow.
Besides Lee, Jeong Keum-yong, head of the strategy office's human resources team, and Kim Sang-kyun, chief legal officer, will also move to Samsung Electronics. The changes will be effective May 1.
An executive said he was shocked over the decision to transfer three key executives from the strategy office to Samsung Electronics as the company normally doesn't send president-level executives to group affiliates.
"The move is aimed at helping Samsung better handle key pending issues such as the change in its recruitment system, stalled negotiations with leukemia-stricken former employees and difficulties in securing parts suppliers for the Galaxy S5 smartphone," said the executive.
A spokesman said the changes will help its new management initiative ― "Mach Management" ― currently being pushed by Chairman Lee Kun-hee take off.
"Samsung Electronics needs more supportive measures from the strategy office as the affiliate is the key earnings source," said the executive.
Early this year, Lee said the conglomerate needs to break through market and technological limits as it is being challenged by the rise of international rivals in key business areas such as smartphones.
"Mach Management" means transforming the firm thoroughly to survive and sustain itself as a top corporation.
The spokesman declined to comment on whether the group will implement follow-up measures; however, Samsung insiders say the conglomerate will see more radical changes.
Samsung is going through a power succession to the third generation and restructuring its business units. In the first quarter of this year, it failed to widen its profit margin gap with Apple as the sales of iphones were above market expectations.
"The profitability gap between Samsung and Apple was narrowed to 14 percentage points during the first quarter of this year from 16 percentage points a quarter earlier. Attention is now shifting to how the latest personnel changes will help Samsung Electronics in upcoming quarters," said So Hyun-chul, an analyst at Shinhan Financial.