Samsung, Restructuring to fight Slump

Samsung Electronics Co. announced on January 21, 2009 that it has finished consolidating its six business units into a Digital Media and Communication division that focuses on consumer products such as cell phone and televisions, and a Device Solution division that handles displays and memory chips.

Samsung’s restructuring has been aimed to slim down its organization in terms of synergy-driven consolidation to effectively respond to the economic downturn. Samsung had intended to maximize its overall performance by nudging each business unit to compete with each other. As its major products need to converge, however, Samsung has been asked to strengthen its competitiveness through cooperation, not competition within its organization.

One of the expected benefits from the consolidated divisions is a strong possibility that the conflicts Samsung has often faced with major clients of LCD and semiconductors such as Sony and Nokia will be resolved, according to Samsung insider. Samsung is supplying LCD panels to Sony while it is in competition with Sony in the LCD TV market, which often causes confusion among its business units. But now, Samsung has two separate divisions based on components and finished goods that will be operated as if they are independent entities. It is believed that Samsung’s large scale restructuring wil help it cope with the conflicts and boost its businesses.