By Kim Yoo-chul
Samsung Electronics plans to shift its corporate priority toward profitability rather than seeking growth in key businesses in which it is involved, according to company sources.
"The market growth in smartphones, televisions and home appliances, the current key revenue channels for Samsung, has flattened due to heated competition and widened consumer options. This situation is focing Samsung Electronics to cut expenditure in operations and other fixed costs," said a high-ranking source, Wednesday, asking to remain anonymous.
The source said rising fixed costs such as wages have emerged as the biggest headache amid challenging business situations.
"The main cuts focus on back-office staff in finance and human resources, and are being made in advance of what Samsung worries may be a tough year. It's inevitable for Samsung to maintain very a flexible business strategy to save costs," said another source.
Samsung spends more than 20 trillion won on salaries. The number of employees at Samsung Electronics rose to 320,000 last year from 180,000 in 2008.
In July of this year, Samsung Electronics reported a seventh consecutive fall in year-on-year profits with rather unimpressive Galaxy S6 phone sales. Also, its TV business is still seeing weak demand in target markets.
"Samsung saw steep corporate growth over the last few years with its smartphone business leading the way. That led the company to hire more people, prompting the company to initiate a Plan B to cut costs," said the sources.
In a meeting with local reporters, Samsung executives said the company has been maintaining greater flexibility in human resources and stressed that the firm would not make significant layoffs.
"Some back-office staff will be dispatched to branch offices," Lee Sang-hoon, president of the company's management supporting unit, said on the sidelines of Wednesday's regular meeting with senior executives of Samsung affiliates in Seoul.
"The Samsung Future Strategy Office has no plan to order group affiliates to cut their workforce," said Lee Joon, chief communications officer, in briefing local media.
At the beginning of the year, Samsung revealed that it was trimming its marketing budget.
At this year's IFA, Samsung scrapped a plan to unveil its new Note-branded "fonblet" and failed to manage programs to help local reporters cover the annual tech fair in Europe to save money.
Samsung Electronics plans to shift its corporate priority toward profitability rather than seeking growth in key businesses in which it is involved, according to company sources.
"The market growth in smartphones, televisions and home appliances, the current key revenue channels for Samsung, has flattened due to heated competition and widened consumer options. This situation is focing Samsung Electronics to cut expenditure in operations and other fixed costs," said a high-ranking source, Wednesday, asking to remain anonymous.
The source said rising fixed costs such as wages have emerged as the biggest headache amid challenging business situations.
"The main cuts focus on back-office staff in finance and human resources, and are being made in advance of what Samsung worries may be a tough year. It's inevitable for Samsung to maintain very a flexible business strategy to save costs," said another source.
Samsung spends more than 20 trillion won on salaries. The number of employees at Samsung Electronics rose to 320,000 last year from 180,000 in 2008.
In July of this year, Samsung Electronics reported a seventh consecutive fall in year-on-year profits with rather unimpressive Galaxy S6 phone sales. Also, its TV business is still seeing weak demand in target markets.
"Samsung saw steep corporate growth over the last few years with its smartphone business leading the way. That led the company to hire more people, prompting the company to initiate a Plan B to cut costs," said the sources.
In a meeting with local reporters, Samsung executives said the company has been maintaining greater flexibility in human resources and stressed that the firm would not make significant layoffs.
"Some back-office staff will be dispatched to branch offices," Lee Sang-hoon, president of the company's management supporting unit, said on the sidelines of Wednesday's regular meeting with senior executives of Samsung affiliates in Seoul.
"The Samsung Future Strategy Office has no plan to order group affiliates to cut their workforce," said Lee Joon, chief communications officer, in briefing local media.
At the beginning of the year, Samsung revealed that it was trimming its marketing budget.
At this year's IFA, Samsung scrapped a plan to unveil its new Note-branded "fonblet" and failed to manage programs to help local reporters cover the annual tech fair in Europe to save money.
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