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Samsung Group

Company Profil

Reference Code: 145

Publication Date: 1 Mar 200

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ABOUT DATAMONITOR

Datamonitor is a leading business information company specializing in industryanalysis.

Through its proprietary databases and wealth of expertise, Datamonitor provides

clients with unbiased expert analysis and in depth forecasts for six industry sectors:

Healthcare, Technology, Automotive, Energy, Consumer Markets, and Financial

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will have on their businesses. Datamonitor maintains its headquarters in London, and

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world's largest 5000 companies.

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SAMSUNG GROUPTABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview .......................................................4

Key Facts........................................................................ 4

SWOT Analysis ..............................................................5

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SAMSUNG GROUPCompany Overview

COMPANY OVERVIEW

Samsung is one of the largest industrial groups in South Korea, operating through anetwork of subsidiaries worldwide. For the fiscal year 2002, the company generated

revenues $116.8 billion.

The company has interests in more than 20 affiliates, and focuses on electronics,

finance, and service activities. Its flagship company, Samsung Electronics, is one of

the worlds largest manufacturers of random-access memory chips. Samsung is

headquartered in Seoul, South Korea.

KEY FACTS

Head Office Samsung Group250, 2-ga,

Taepyung-ro

Chung-gu

Seoul 100 742

South Korea

Phone +82 2 727 7114

Fax +82 2 751 2083

Web Address http://www.samsung.com

Revenues/turnover

(US$ Mn)

116800

Financial Year End December

Employees 175000

SIC Codes SIC 3639 Household Appliances, NECSIC 6719 Offices of Holding Companies, NEC

NAICS Codes 333298, 335212, 335228, 551112

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SAMSUNG GROUPSWOT Analysis

SWOT ANALYSIS

Samsung Group is one of the largest industrial groups in South Korea, operatingthrough a network of subsidiaries worldwide. The company has interests in more than

20 affiliates, and focuses on electronics, finance and service activities. Samsung

Groups flagship company, Samsung Electronics, is one of the worlds largest

manufacturers of random-access memory chips.

Strengths

Improvement in credit rating.

In June of 2002 Moodys increased the companys credit rating to Baa1, while

Standard & Poors raised its rating to A- in November 2002. This represents the

highest ratings since Samsungs previous high in 1996. This improvement suggests

that the company has now recovered from the effects of the Asian financial crisis, and

the higher credit rating positively impacts upon its corporate image.

Diversification as a source of competitiveness

A key source of the companys competitiveness is the continuous transformation of

the business through diversification. Samsung achieved surprisingly strong results

due to competitive pricing and a broadening portfolio of products catering to premium

demand. This development differed from that of its competitors which had a difficult

year and allowed Samsung to expand its market share.

Strength of telecommunications businesses

In 2002-2003 the firms advanced mobile phones with color-screens, voice dialing and

cameras have strongly boosted its sales. Its handset business generated a 48%

Strengths Weaknesses

Improvement in credit rating.

Diversification as a source of competitiveness

Strength of telecommunications businesses

Decline of Memory Chips Business

Fluctuations in telecommunications demand

Samsung Securities suffering from poor profitability

Opportunities Threats

Investment in Supply Chain

Sale of affiliated companies

International Expansion

Strong competition

Regulatory Issues and Safeguarding of Intellectual Prop-

erty Rights

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increase in sales in 2002. Samsung has now doubled its market share of mobile

phones in two years, and has become the third largest mobile phone manufacturer

globally.

Weaknesses

Decline of Memory Chips Business

The company faces falling prices for its memory chips. As these constitute a

substantial proportion of the companys revenues, price decline is a major concern. In

late 2002 the firm announced a major $1.2bn investment in its memory chip business

by building new semiconductor facilities, however this may not halt a short term

decline in sales.

Fluctuations in telecommunications demand

The Samsung Group attributes its financial success over the past year to its

telecommunications business which sold over 46 million units in 2002. This positively

impacted upon revenues, although it remained the only activity preventing Samsung

from revenue decline. A slump in demand is a realistic threat and could be prompted

by competitor innovations or a change in fashions. Samsung must therefore strive to

invest and improve its other businesses in order to protect its financial stability and

market share.

Samsung Securities suffering from poor profitability

Samsung Securities has experienced a period of poor profitability over the past few

yearsdue to significant contingent liability exposures and a reduction in brokerage

commissions. Samsung Securities recent poor performance will affect the Group as a

whole unless the trendis halted.

Opportunities

Investment in Supply Chain

In 2002 and 2003 Samsung has invested heavily in research and development,

production, and marketing. The group intends to build a 24-hour research and

development system which will continuously develop and stimulate demand.

Production investment will boost efficiency and the major marketing campaignsembarked upon should add value to products and increase brand awareness through

the promotion of the DigitAll brand.

Sale of affiliated companies

The company has sold a number of its affiliated companies in recent year in an effort

to reduce and restructure its debts. The number of companies affiliated to Samsung

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has dropped from 61 to 25 in the last few years. Samsung Groups program of

restructuring has enabled it to overtake Hyundai to become South Koreas biggest

company. Samsung could further streamline its operations and boost efficiency in

order to combat the adverse economic trends facing the chip making business.

International Expansion

Samsung is currently preparing to enter pioneer markets such as India and Eastern

Europe. In line with the scheme the group intends to build a 24-hour research and

development system to link global operations by having an integrated business

administrative system. By establishing a foothold in these growth markets Samsung

may be able to benefit from the less competitive and saturated markets and its

improvement of its international network infrastructure will position it well for future

global growth.

Threats

Strong competition

Samsung Group faces strong competition from the other Korean industrial groups.

Examples of South Korean industrial groups competing with Samsung include the LG

Group and SK Group. Samsung Group also faces strong competition from major

organizations across all areas of its business. Samsung Electronics competitors

include Matsushita, Micron Technology and Sony, while Samsung Life Insurances

main competitors include Kyobo Life Insurance, Meiji Life Insurance and Sumitomo

Life.

Regulatory Issues and Safeguarding of Intellectual Property Rights

The regulations and legal frameworks in place in Korea have created problems for the

Group as the Korean government recently halted plans for its Life Insurance division

to go public due to legal concerns. With the large number of new products being

designed and marketed each year, Samsung is also experiencing difficulties in

safeguarding its intellectual property rights which are vital in retaining competitive

edge.

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