This is the first in a series of articles highlighting New Year challenges facing corporate leaders of Korea Inc. ― ED.
By Kim Yoo-chul
Samsung Electronics faces two big challenges this year from internal and external forces.
A massive supply of cheap smartphones from China is flooding the domestic market. This has amplified concerns about the future leadership of the conglomerate following the health problems of Chairman Lee Kun-hee.
A report by the Bernstein Research consultancy says the tech giant needs "another 1993 moment," referring to Lee's call at that time for a complete corporate overhaul.
The report reads that, "2015 will be challenging. A tall order indeed for the next-generation of management with the chairman's health in question."
Twenty-one years since the ‘1993 moment', Samsung has become the world's biggest smartphone manufacturer.
The situation facing Samsung now could be considered a corporate version of a "mid-life crisis", which it will either overcome and grow further from or slip and lose its preeminent position in the market.
It's a toss-up which way Samsung will go.
On the plus side, it has decades of experience built on a can-do spirit and a complementary business portfolio that covers the production of smartphones and the chips that go into them.
On the negative, Samsung's major weakness can be seen in plain sight ― a lack of ingenuity when it comes to software development.
It's an obvious shortcoming and no doubt those at the top levels of Samsung are aware of this.
"We should find new demand and strengthen competitiveness in software content and change our rigid corporate culture," Vice Chairman Kwon Oh-hyun said in his New Year speech.
Samsung's woes were highlighted last year when the company reported third- quarter revenue below 50 trillion won ― the first time this had occurred since the second quarter of 2012.
Operating profit also totaled below 4 trillion won for the first time in three years.
Samsung immediately began trying to boost shareholders' confidence by raising its dividend payouts by up to 50 percent for next year and buying $2 billion worth of its own shares.
Samsung is clearly in need of new growth engines, company officials agree.
Already, it has been talking about healthcare, among other sectors, but needs areas to guarantee immediate growth. These areas could include e-commerce, software and services.
"You should think that innovation in products is coming from innovation in parts. For example, if you want to have new products such as truly flexible handsets, notebooks or even transparent handsets, then you need to source the right components. Samsung is the global leader in displays and semiconductors. We are positioned well to create new systems. Our plan to adopt the Tizen platform for all Samsung TVs in 2015 is a good start to representing our zeal for this path," said a Samsung executive talking to The Korea Times.
Despite its recent difficulties, Samsung still plans to achieve $400 billion in revenue by 2020 and currently sits on over $50 billion in cash reserves.
By Kim Yoo-chul
Samsung Electronics faces two big challenges this year from internal and external forces.
A massive supply of cheap smartphones from China is flooding the domestic market. This has amplified concerns about the future leadership of the conglomerate following the health problems of Chairman Lee Kun-hee.
A report by the Bernstein Research consultancy says the tech giant needs "another 1993 moment," referring to Lee's call at that time for a complete corporate overhaul.
The report reads that, "2015 will be challenging. A tall order indeed for the next-generation of management with the chairman's health in question."
Twenty-one years since the ‘1993 moment', Samsung has become the world's biggest smartphone manufacturer.
The situation facing Samsung now could be considered a corporate version of a "mid-life crisis", which it will either overcome and grow further from or slip and lose its preeminent position in the market.
It's a toss-up which way Samsung will go.
On the plus side, it has decades of experience built on a can-do spirit and a complementary business portfolio that covers the production of smartphones and the chips that go into them.
On the negative, Samsung's major weakness can be seen in plain sight ― a lack of ingenuity when it comes to software development.
It's an obvious shortcoming and no doubt those at the top levels of Samsung are aware of this.
"We should find new demand and strengthen competitiveness in software content and change our rigid corporate culture," Vice Chairman Kwon Oh-hyun said in his New Year speech.
Samsung's woes were highlighted last year when the company reported third- quarter revenue below 50 trillion won ― the first time this had occurred since the second quarter of 2012.
Operating profit also totaled below 4 trillion won for the first time in three years.
Samsung immediately began trying to boost shareholders' confidence by raising its dividend payouts by up to 50 percent for next year and buying $2 billion worth of its own shares.
Samsung is clearly in need of new growth engines, company officials agree.
Already, it has been talking about healthcare, among other sectors, but needs areas to guarantee immediate growth. These areas could include e-commerce, software and services.
"You should think that innovation in products is coming from innovation in parts. For example, if you want to have new products such as truly flexible handsets, notebooks or even transparent handsets, then you need to source the right components. Samsung is the global leader in displays and semiconductors. We are positioned well to create new systems. Our plan to adopt the Tizen platform for all Samsung TVs in 2015 is a good start to representing our zeal for this path," said a Samsung executive talking to The Korea Times.
Despite its recent difficulties, Samsung still plans to achieve $400 billion in revenue by 2020 and currently sits on over $50 billion in cash reserves.
