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Faced with tougher competition in global markets, Samsung Group, Korea’s largest conglomerate, is setting up its next-generation business plan.

Samsung announced on October 19 that it is planning launch a task force under its office of strategic planning in order to revitalize its business in preparation for the next five or 10 years. The task force, to be led by Samsung Advanced Institute of Technology Director Im Hyeong-gyu, will consist of three SAIT officials and six or seven executives of Samsung subsidiaries. The task force’s duties will include creating new blue oceans, exploring new mid- and long-term businesses and strengthening overseas business to maintain its position as a leading global enterprise.

Samsung has decided that it needs to make more aggressive changes in the rapidly changing environment of global business. A high-ranking official of the strategy planning office said, “The task force will evaluate, examine, and encourage our operations to find business lines with enormous potential for growth, which have been pursued by Samsung’s subsidiaries since June. However, the key is to find a new source of business in a completely new field, not just to expand our existing business realm or to heighten the effect of synergy.”

Top-level executives of Samsung, in fact, are feeling a strong sense of crisis regarding the entire electronics industry as its growth has been stalled for the past few years. In the case of Samsung Electronics, sales have not grown since 2005 and profit margins have continuously decreased. The nation’s flagship company has concentrated its energy on nurturing its “eight driving forces,” including the next-generation of mobile communication, beginning three years ago but it has not yet produced remarkable results. Chairman Lee Kun-hee has repeatedly stressed the so-called “sandwich theory” and “crisis theory,” saying, “We should seek out new businesses as soon as possible. We have no time to hesitate.”

The fields of energy, bio-technology and the environment have been cited by Samsung as providing potential new business opportunities. Samsung has recently brought in a professional from General Electric to take charge of its environmentally-friendly, energy-related business endeavors and has set up a task force to take exclusive charge of its energy-related business at SAIT, Samsung’s advanced technology institute. Such initiatives are aimed at advancing into the energy market of the future, which includes solar energy. Samsung is also active in the development of bio chips, which are deeply connected to the semiconductor business.

Citing GE, which transformed itself from a smokestack company into an energy-oriented, environmental company, a high-ranking executive of Samsung said, “The energy and bio-technology industries are still in the early stages of development and the environmental sector is new to us. However, we can get started after we reach a conclusion.”

Samsung is actively considering mergers and acquisitions, or M&A, of foreign firms as well. Samsung has maintained utterly independent survival strategies, rather than bulking itself up through M&A. Many experts both in and out of the company have noted that its stand-alone strategy of exploring high-tech business by investing a huge amount of money every year has reached its limit.

A high-ranking official of the strategy planning office said, “We well know that viable markets have been preoccupied by overseas enterprises and that the profitability of core businesses has shown a downward trend,” adding, “The company can find M&A targets in the foreign companies of industries which are new to us.”
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