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The departure of Samsung Group chairman Lee Kun-hee out and disbanding of the group’s strategic planning office has set subsidiaries on a more solitary course under their respective management. They will have to strengthen their autonomy and will be evaluated on their achievements without having to seek cooperation with other affiliates.
And although chief executives will form a council to discuss major issues, it will still become more difficult for them to make speedy decisions and coordinate overlapping projects efficiently, pundits predict. Japanese electronic firms are determined to take advantage of that crisis to overtake Samsung.
In the second half of 2007, to take an example, Samsung handed the marketing of Samsung Techwin's digital camera division over to Samsung Electronics, and Samsung Electronics' digital media president Park Jong-woo assumed responsibility for the division. This was a measure aimed at making the most of Samsung Electronics' worldwide sales network. As a result, Samsung ranked fourth in the global digital camera market in 2007, outperforming Japan’s Nikon.
Such cooperation in projects between subsidiaries will become more difficult now the strategic planning office, which used to coordinate such projects, will be disbanded. Japan’s Nikkei business daily said Japanese electronic firms “will step up efforts in the belief that this is their chance to retake the market they lost to Samsung Electronics."
Chief executives of subsidiaries will compete to perform better, which will inevitably cause conflict about overlapping projects. In early 2007, Samsung Electronics clashed with Samsung Techwin by pushing for development of digital cameras on its own. At present, Samsung Electronics is competing with Samsung SDI in active-matrix organic light emitting diode (AMOLED), a next-generation project.
Samsung Electronics says an ideal system would be one where it produces large components for TVs and Samsung SDI makes small parts for mobile phones. But SDI feels investment overlaps can be prevented only if Samsung SDI, which began the project and currently has outstanding original technology, controls the project.
If such conflict becomes serious, Samsung staffers could turn to Lee Kun-hee, as the largest shareholder, to exercise de-facto management right over the conglomerate or for the strategic planning office to be reestablished.
Some observers predict that the Samsung Economic Research Institute, the group's think tank, will have a bigger role. SERI is studying Samsung Group's mid- and long-term strategies, as well as preparing theoretical justification and action programs for ownership restructuring and transfer of group control.
Group vice chairman Lee Hak-soo, the head of the strategic planning office, has said the group would take time to consider setting up a holding company. Once the strategic planning office is gone, SERI will remain as the only agency in the Samsung Group that can control the group's strategic planning. Some staffers from the office are likely to be transferred to SERI, but it remains to be seen how influential SERI can be given that it is not an executive body.
(englishnews@chosun.com )
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