By Kim Yoo-chul
Staff Reporter
The Samsung Group and LG Group, two of the country's biggest conglomerates, are planning bigger roles for the members of their founding families as they look to jolt their key businesses and develop new revenue engines.
Sources at both Samsung and LG are hinting that the Lees and the Koos may have a larger share of the chief executive officer (CEO) positions at key affiliates of the groups next year.
This shows that both groups are seeking a similar brand in leadership, defined by assertiveness and bold-decision making, as they seek to compete in a toughening business environment both here and abroad.
Samsung and LG are both reliant on the technology sector, with Samsung Electronics now established as the world's biggest maker of consumer electronics and memory chips while LG Electronics is closing the gap with its bitter rival in flat-screen televisions and mobile phones.
Samsung is also intent on developing new growth engines in biotechnology and "green" tech, while LG is focused on improving its competitiveness in consumer electronics.
LG apparently believes that handing more responsibility to the founding family will make its "fast-follower’’ strategy more effective, while Samsung has been grooming Lee Jae-yong, a Samsung Electronics senior official, as the apparent heir to former group chairman Lee Kun-hee for years now.
Both Samsung and LG are expecting personnel reshuffles this month, involving a number of CEO and senior executive positions for both, and it could happen as early as this week for LG, sources said.
"Under their respective ownership structures, it is possible to expect faster decision making and more ambitious investment from Samsung and LG when they feel the market conditions are right," said an industry official, Sunday.
"Amid the intensifying competition in the global consumer electronics markets, both Samsung and LG feel they need to be more agile and decisive."
Samsung officials are declining to comment on the speculation that the younger Lee will be promoted to either a vice president or CEO position of a key affiliate.
"There is a possibility that Samsung could opt for a mid-scale reshuffle, instead of drastic changes, although it is obvious that the founding family will be more hands-on in business strategies," said another industry source.
"With the global economy improving, it is known that Samsung scrapped what it called a scenario-based management scheme to give more power to its back offices."
Since the elder Lee stepped down from the management helm, Samsung had been adopting an independent management system across its affiliates, with the former corporate controlling tower, the strategic planning office (SPO), being dismantled.
However, there are voices within Samsung that a return to a more centralized management approach is needed as the group faces tougher competition in its key markets.
Samsung Electronics, the world's biggest seller of flat-screen televisions, has benefited from being quick out of the gate in light-emitting diode (LED) backlit liquid crystal display (LCD) televisions.
However, rivals such as Japan's Sony and the United States' Vizio are now looking to give Samsung Electronics a run for its money in the same sector.
According to DisplaySearch, a market research firm, the global market for LED-backlit LCD televisions is expected to surge from 2.3 million units this year to 80.6 million units by 2013, then accounting for 40 percent of all LCD televisions sold.
And with an edge in content, Sony may gain the upper-hand over Samsung Electronics in the emerging segment of three-dimensional (3D) television.
Samsung Electronics is also the world's biggest maker of LCD panels, but it now sees rivals from Taiwan closer in the rear-view mirror at least in China.
Samsung Electronics still trails Nokia in the handset market, and its presence in smartphones, which provide larger margins than conventional handsets, is still not big enough to compete with the Blackberries and iPhones of the world.
"It's debatable whether giving more power to the founding family will be the right choice for Samsung. But it is hard to admit that the company will need strong leadership to foster new growth engines, such as bio-similar, solar energy and home appliances," said an official at the Federation of Korean Industries (FKI), the country's biggest business lobby.
LG Group is seen as the more desperate of the two industry giants, as other than its emerging batter business, none of the group’s key affiliates had what could be called an impressive 2009.
LG Electronics may be the world's second-biggest television maker, but it isn't doing much to challenge the assumption that Samsung Electronics' lead is safe. Its slow start in LED-backlit televisions drew criticism from the within the group and the industry alike.
Although the company is planning to hold a news conference for its 3D television strategies on Tuesday, it looks like they have no specific plans to overcome the lack of content.
LG Electronics is also the world's No. 3 handset vendor behind Nokia and Samsung Electronics, but its bumbling smartphone business could eventually hold it back.
Industry watchers believe that a change in management helm could be in the pipelines.
There are speculations that Koo Bon-joon, currently the vice chairman of LG International and son of group chairman Koo Bon-moo could land a role in the group's electronics business, although LG is refusing to comment on the theories.
"We need bold measures. This may be achieved by giving a senior executive who is part of the founding family to call the shots for the electronics unit," said an LG senior official, who didn't want to be named.
"An idea is to give a marketing expert to take control of our mobile business, while the current mobile chief moves to the new role as chief technology officer to strengthen the software competitiveness of our smartphones."
yckim@koreatimes.co.kr