Samsung Electronic Corporation: Governance of Chaebols

II. Business Model and Strategic Plan Part I: Existing Business or New Business Division; Vision, Mission, and Value Proposition ………………………………6

The core problem at the heart of the fallen education empire is its weak corporate governance that finally leads to corporate failure. According to Contemporary Issues in Accounting, the corporate governance, as simply described, is “the system by which business corporations are directed and controlled”(Rankin.M., 2012). The poor corporate governance results in corporate failure, that is, “closure or cessation of business activity that results in a loss to its creditors”(Scapens, Ryan, & Fletcher, 1981).

This study seeks to examine the market structure and strategy of Samsung Company analyzing its micro-environmental level as well as SWOT analysis. In this regard, it is worth pointing out that Samsung is a well-established company. It manufactures different electronics products including home appliances and smartphones. It has been on the market since 1969. Its electronics division has 169 subsidiaries and affiliates, which are divided into three to include Consumer Electronics, Information Technology & Mobile Communications, and Device Solutions division (Samsung 2016, 2). In this precept, consumer Electronics focuses on advanced technology, exclusive design and significant offers for presenting new products such as TV, Refrigerator, Air Conditioner, and Medical equipment among other products. Information Technology & Mobile Communications division, on the other hand, produces mobile handset and customer friendly communication products. The Device Solutions in the same dictum division focuses on display pane and semiconductor products. The company has grown globally, and establishes outlets in different parts of the world, including the U.K.

The first section of this essay focuses on the possible causes of corporate failures including dominant CEO, poor strategy decision and the failure of internal control. Secondly, it discusses how the third edition of corporate governance principles and recommendations could be applied to prevent the causes of the failure. The 1st, 2nd, and 7th principles along with specific recommendations will be mentioned in this section. However, the context is concerned solely with the causes stemming from Dick Smith itself.

Their employees are united by the strong values of accountability, respect, teamwork and integrity. They make sure that extraordinary ethical standards, and a steady commitment to safety, invade company’s organization. Some of corporate governance has found lacking as following its area;

Today Samsung has evolved into a group of companies unmatched by others in its range of industries and performance. It is now globally focused and responsive to the needs of each market, and more committed than ever to true innovation. The group’s three core business sectors are electronics, finance and trade and services.

The evolution of the world has left nations with an ever changing business environment which keeps companies on their toes.With the technological advancements as well as changes in demographic, many companies have to rapidly change the way they react to these changes in order to stay relevant in a competitive environment (Jovanović, 2015). Samsung has adapted to today’s business through adopting Western business practices into its Japanese system as well as digital technology(Khanna, Song & Lee, 2011).The role of management in today’s industry has rapidly changed from the role of a manager imposing restrictions to an organisational tool, not only for a company but personally as well (McCrimmon, 2010).Management system used in Samsung during the S-level recruitment program proves the importance of managerial ranks as well as an organised system(Khanna et al, 2010).

On being operational in the global market, Samsung has been subjected to various kinds of pressure. Therefore, the focus of this report is show while formulating an international strategy how Samsung should take both environment factors into consideration that will shape their business approach. The analytical business tools namely PESTLE and Porter Five Forces will be used to understand the micro and macro environment drivers of Samsung’s strategy.

The corporate governance debate has been a global phenomenon, attributed to the increasing deregulation of worldwide capital markets and the expansion of the shareholder class . Such changes have increased awareness of the importance of corporate governance practices,

South Korean economy, politics, culture and media is greatly influenced by Samsung. Samsung contribute into 15% of South Korean exports. Samsung’s revenue is 17% ($1082 Billion) of South Korean GDP.

Company Background: Samsung is a South Korean multinational company those starting its business as a small trading company and right now becoming world largest corporation. The company deals with its business in several sectors such as advance technology, finance, petrochemical, semiconductors, plant construction, skyscraper, medicine, fashion, hotels, chemical and others. The company was established in 1969 in Suwon, South Korea and known globally for its electronic products (Kelly, 2011). The company is manufacturing several latest technologies, electronic appliances such as mobile phones, tablets, laptops, TVs, refrigerators, air conditioners, washers and other products. The company runs its operations and sales its products in 61 countries with approx 160,000 employees in all over the world (SAMSUNG, 2014). Moreover, the company acquired the position of the world biggest IT maker in 2009 by beating the Hewlett-Packard (HP) previous leader. Its sales revenue in the segment of LCD and LED is the highest in the world. Furthermore, Samsung also becomes world leader in the segment of tablets, mobile phones and gadgets.

As the world’s eleventh largest country in 1996, people expected Korea to surpass Japan in the coming millennium and Korea was invited to join the OECD (Organization for Economic Cooperation and Development). The facts that by then Korea was the world’s top manufacturer of computer RAM chips, the world’s second-largest ship-builder, the third largest maker of semi-conductors, and the fourth largest electronics producer meant that by the time the currency crisis hit the surrounding region following a devaluation of Thai baht in July 1997, investors (defined in this paper as the general public, plus speculators) believed that the crisis wouldn’t hit Korea. These investors were either too blinded by the Korea’s phenomenal economic performance (a GDP equivalent to

Shareholders holding minority interests in closely-held corporations are at risk of unfair or oppressive treatment8 by the majority or controlling shareholders, to an extent well beyond that of their counterparts in partnerships or in corporations whose shares are publicly traded.

Because of the extremely intricate and sophisticated nature of manufacturing semiconductors, a competitor should expect high initial capital requirements to build facilities needed for production. Cost to build a new semiconductor fab has gone up from $200 million in 1985 to $3 Billion in 2004. Incumbent companies have capabilities to design newer generations of semiconductors with greater amounts of memory and processing abilities that make older generations obsolete. Older generations tend to drop half their amount in price one year after a new model is reduced (exhibit 6). The United States

While it is not a simple matter to pinpoint what exactly should be "fixed," the Toshiba case