Keywords: samsung organizational structure, samsung culture
Samsung was named by Lee Byung-chul, founder of Samsung Electronics when he established the Samsung Trading Company on March, 1938. Sam in Samsung is defined as strong, abundant and big; while “Sung” means high and bright. (Chnag, J. H., 2010) Interestingly, Samsung’s origin was not involving electronics. Initially, Chairman Lee set up a trade export company in Korea that sold fish, vegetables, and fruit to China. Start from 1958, Samsung began to expand into other industries such as media, financial, ship building and chemicals and Samsung Electronics was established under subsidiary of Samsung Group in 1969. (“Samsung History”) The company then expanded to semiconductor business and became the first chip-making facilities in the country during that time. Samsung Electronics focused on four areas which are digital media, semiconductor, telecommunication network and LCD digital appliances. (“Wikipedia”, 2012) In 1993, the “lightest” mobile phone of its era was developed. (“Samsung History”) Finally, it surpassed Sony to become world’s twentieth-largest and most popular brand. Samsung was the world’s largest manufacturer of OLEDs with 40% market share worlds wide and 90% share of global AMOLED market. More than 600 American patents and 2800 international patent are owned by Samsung Electronics in 2006 that makes it as the largest owner of AMOLED technology patents. The company also became the second-largest mobile-phone maker beating Motorola in 2007 for the first time. In 2009, it became world’s largest technology company overtaking Hewlett-Packard measure by sales. In 2010, it produces 30 nm-class DRAMs and 20 nm-class NAND flashes which were the first time in the world. At 2011, it is the world’s largest mobile phone maker and second-largest semiconductor chip maker. Samsung Electronics became the largest smartphone vendor due to sales of Galaxy SII and Galaxy Note devices. (“Wikipedia”, 2012)
Mechanistic organization is a bureaucratic organization which adheres to the chain-of-command principle, with each person controlled and supervised by one superior. The structure of this organization is taller than organic organization. Also, many rules are developed and the decision making process is centralized. Each employee has fixed duties and the communication channels are formalized in such rigid hierarchical relationship.
Samsung Electronics is a type of mechanistic organizational structure because it has rigid hierarchical relationships.
Figure 1 and figure 2 show the chain of command in the company, which extending from upper organizational levels to lower level that clarifies who reports to whom. Figure 2 shows that there are lots of departments under the control of Chief Executive Office. Employees have their fixed duties in respective department. For instance, employees who are specialized in producing chips are working under chips manufacturer whereas employees who are highly skilled in producing mobile phones are working under mobile phone manufacturer. (Robbins, DeCenzo, and Coulter, 2012) These two figures also clearly show that Samsung Electronics is composed of tall organizational structure. All of the powerful authorities are held by the top management of the company which is Lee Kun Hee , the chairman of the Samsung Electronics with the help of the Office of Secretaries and sometimes referred to as “emperor management” or “dictatorship”. (Chang, S. J., 2008) Office of Secretaries helped chairman to control and direct the individual affiliates. Their main function are finance and accounting, auditing, planning, public relations, and human resource management, including the hiring and firing of all executives within the organization. Even the important strategic decision and sizable investment decision have to be examined by the office first. The percentage of decision made by the chairman is 20%; by Office of Secretaries is 40%; by affiliate presidents is 40%.(Chang, S. J., 2008)In other word, all of the important decisions are decided by the chairman, Office of Secretaries and affiliate presidents. As such, Samsung Electronics implement centralized decision authority.
The communication channel of Samsung Electronics is formalized. Formalization describes how an organization’s jobs are standardized and the extent to which employee behavior is guided by rules and procedures. This element makes the process of succession routine and regular. Thus, there will be minimal disturbance to an organization function if there are people being replaced. In Samsung, the personnel function is under CFO while CFO reports to and receives orders from CEO. (Chang, S. J., 2008) For instance, when the company needs to make an investment, the proposal is written by the related business unit. Then, the proposal is reviewed by the finance department, which is then passed to finance team of Office of Secretaries after CFO reports the proposal to CE