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Thursday, May 22, 2008

Samsung's reorganization and reassignment creates further controversies

First, it was the top level executives; now, Samsung Group is reorganizing its companies in an effort to reinvigorate its image. According to the latest news, Samsung Electronics Co.(SEO: 005930), the major profit earner of Samsung group, will be combined with its home appliance division that makes refrigerators, air-conditioners and washing machines. The home theatre, DVD and Blue-ray player business will be merged with its TV section. Samsung’s notebook computer, digital music player and set top box business will be transferred to its telecommunications network division. Wall Street Journal reports:

The moves are "in line with the latest technology trend" and "we hope to further strengthen our position as a digital convergence leader," the company said.

The moves follow a change at Samsung Group's top management last week, when Samsung Electronics said external relations chief Lee Yoon-Woo would be its new chief executive, succeeding Yun Jong-Yong, who had led the electronics giant since 1997.

But analysts said it is still uncertain if the reorganization would bring about any significant synergies.

"We haven't paid attention to its home appliance business, which hasn't contributed to its profitability much," said Song Myung-Sup, an analyst at CJ Investment & Securities. "It remains to be seen if the combination will actually create synergies."

Unfortunately, what seems to be an effort to revive has created further agitation and controversies. Thirty nine year old, Lee Jae-Yong, Samsung Electronics’ former chief client officer and son of the former chairman of Samsung Group, Lee Kun-Hee has been reassigned to a new post. On Thursday, in a statement, Samsung Electronics said that Lee Jae-Yong, will work in China, India, Russia, and in other commonwealth of Independent states to develop the company’s business. Though he was not charged of any wrong doing, after Lee Kun-Hee was charged with tax evasion and breach of trust, Lee Jae-Yong resigned along with his father. Yong’s reappointment has irked the Samsung employees. They protested against his reassignment.

Related articles:

Wall Street Journal

AFP

AP

AP

Korea Times

Asianbiz


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