Samsung Restructures Ailing Division

Managing Director of Samsung Electronics Lee Jae-yong, son of the Samsung Group chairman Lee Kun-hee, is taking charge as chief customer officer (CCO), a newly established position, and will formally engage himself in the management line.

The general management of digital appliance business, with its poor performance record, has been demoted as a business division and will be conducted directly by Samsung Vice Chairman Yun Jong-yong.

Samsung Electronics confirmed the restructure plan based on such core frames and revealed it on January 19.

The most conspicuous feature in the organizational restructure plan is the new establishment of CCO. Managing Director Lee, positioned as the CCO, will also be in charge of managing the global enterprises which encompasses business with Samsung Electronics, major investors, and general customers, and at the same time probing for new partnerships and investors.

“It reflects the volition of Chairman Lee Kun-hee to apprehend the trends in the world business and infuse them into new enterprising areas,” explains an official at Samsung Electronics.

The organization of CCO will be represented as a separate body rather than a subsidiary of general management support, which deals with the general management tasks of Samsung Electronics. With Managing Director Lee Jae-yong turning in performance reports directly to Vice Chairman Yun and not to other presidents, it is likely that the accession of the management will be accelerated.

Samsung Electronics also demoted the general management of digital appliance business, formerly under the domain of a president-rank, as the business division under Deputy President Choi Jin-gyun, and is allowing Vice Chairman Yun to direct the overall business.

This can be construed as being purported to endow the members of less performing business with alertness and to involve the CEO directly in the recovery of performance. The digital appliance business division of Samsung Electronics has suffered deficits consecutively since 2005.

At the same time, Samsung Electronics expanded and reinforced the general technology body, of which the former President of General Information Communication Lee Gee-tae was promoted to in the personnel changes of president-ranks on January 16. It also created a division of manufacturing technology and designated President of Memory-Manufacture in General Semiconductors Kim Jae-wook to take charge of the division. The Digital Solution Center was also allocated to the manufacturing technology division.

“The restructuring was not carried out on a grand scale but was intended to reflect business performances,” stated Vice Chairman Yun regarding this organization restructure. “We gave birth to new organizations so as to precipitate transformation and renovation.”

mikemoon@donga.com