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Samsung Sees Organizational Shakeup

1/21/2009 12:40:00 PM Eastern

Seoul, South Korea — Samsung Electronics implemented a major restructuring of its management teams here Tuesday in an effort to streamline operations to better address worsening economic conditions.

Under the move, the company consolidated five business units into two, and is reassigning two-thirds of its executives and relocating some 1,200 staff members, the Korean Herald reported.

The changes are expected to eliminate bureaucracy and speed decision making at a time when flexibility is needed to deal with an economic downturn that “threatens its existence,” Samsung said in a statement.

Some analysts expect Samsung to report its first quarterly loss in eight years later this week.

The organizational changes follow a shakeup of top executives at the Samsung Group, Samsung Electronics' parent, which resulted in the turnover of almost half top management positions.

Under the change, the company will integrate four business units — semiconductors, LCDs, mobile phones and consumer electronics — into two divisions: “parts” and “sets.”

The remaining unit — the management support division — will be absorbed into the two new divisions.

The sets division, called digital media and communications, will handle electronics products including mobile phones and TVs, and will be headed by president Choi Gee-Sung.

The parts unit, called device solutions, will handle electronics components including semiconductors and liquid crystal display panels, and will be headed by Samsung's chief executive Lee Yoon-Woo.

Samsung said the restructuring would help to assuage large customers including Nokia and Sony, which lacked confidence in a components supplier with interests competitive to their own.

Through the changes some 1,200 staff members will move from Samsung's headquarters in Seoul to its regional operations, leaving 200 people to man the headquarters.

The company also replaced heads of five of its eight overseas operations.

Dong Jin Oh, Samsung Electronics America president and CEO, is stepping down from his position in North America and will be replaced by Chang-Soo Choi. Choi has a proven career within Samsung, leading the strategic development of several divisions including the Information Systems and Computer Systems Divisions over the past 30 years. 

At his former position within Mobile Device Division at Samsung’s Telecommunication Business, Choi as executive vice president was responsible for leading international sales and marketing in addition to providing the strategy for the global telecom mobile phone business under president Gee Sung Choi. Oh will continue as an advisor to the Samsung organization from its global headquarters in Korea

Meanwhile executive vice president Shin Sang-Heung will lead the company's European operations.

Senior vice president Shin Jung-Soo will be in charge of South East operations, while the CIS subsidiary and Middle East and African operation will be overseen by vice president Suh Chi-Won and senior vice president Bae Young-Tae.

In related moves, Samsung said it is cutting pay to executives by 20 percent and reducing other benefits.

The restructuring follows the resignation last April of longtime chairman Lee Kun-Hee after a corruption probe ordered by parliament. Lee was convicted of tax evasion and given a three-year suspended prison term.

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