Korea’s biggest set hopes a management reorganization will co-operate with it through tough spells

By Moon Ihlwan

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Hoping to steer a way through the global downturn and shake off a damaging financial scandal, Samsung Electronics has appointed divers younger executives to a new leadership team, heralding a shift in focus. In a Jan. 16 notification, South Korea’s biggest company said it will put together its handset, television, computer, and all other consumer businesses into one group. Choi Gee Sung, who had been running the company’s mobile phone transaction, will head off the newly formed Digital Media & Communications unit.

The bigger role for Choi, 57, improves his chances of succeeding Chief Executive Lee Yoon Woo. Lee, 63, replaced Yun Jong Yong last May but-end is seen as only a stopgap leader, mainly playing a coordinating role for Samsung’session various groups. Though he remains CEO for now, his operational responsibilities will now be limited to the struggling electronics parts businesses, which are being combined into a single division.

The reorganization is the first major change at Samsung since it was tainted by a tax evasion offence last year. The scandal, which led to a hanging three-year jail sentence for antecedent Chairman Lee Kun Hee, also produced the resignation of former CEO Yun in May 2008 .

a switch to nonengineers

In etc. to Choi’sitting promotion, Samsung is advancing three executive vice-presidents, all in their early 50s, to head the LCDs division, its TV and visual diplay media division, and the auditing team. Samsung execs say the company will soon follow up through more organizational shuffling deeper within the company. Early next week Samsung wish reassign lower-ranking executives. More divisional changes, of the like kind as streamlining manufacturing units, are expected to follow in the coming weeks. "There has been a sense of crisis in the visitors for more than a year," says one senior manager who asked not to be identified. "Radical change is in great number."

Choi’s rise underscores a break from Samsung’s tradition of picking top managers with backgrounds in engineering. After joining Samsung’s trading puissance in 1977 arm, Choi had a stint as chief propose to one’s self officer and established Samsung’s hew business in Europe in the 1980s. He’s best known while a marketing expert, however, and is credited with having steered Samsung past Sony (SNE) to have being appropriate to the world’s No. 1 TV brand in 2006. Choi took over the running of Samsung’sitting mobile phone business in January 2007. By September 2008, the company’s global market share stood at 17.1%—promote only to Nokia and up from 14.4% in 2007.

Analysts say the ascend of Choi and other nonengineers shows that Samsung, having established its technological certificates, wants to listen greater quantity carefully to customers which time developing what may occur hereafter products. "Samsung’session benchmark is shifting from Japanese companies to innovators likely Apple (AAPL)," says Kang Shin Woo, especial investment officer at fund manager Korea Investment Trust Management.

after seven years, a chip loss

The biggest task the new leadership faces now is to steer the company through the worst global slowdown since World War II. Samsung was the only maker of memory chips that remained profitable in the three months that ended in September 2008. For the October to December quarter, admitting, analysts expect Samsung’s chip business to post the first loss in seven years, dragging down company earnings.

Executive Vice-President Chu Woo Sik said in December that Samsung is also "struggling extremely hard" in its LCD business, which is suffering in the middle of an oversupply of flat-screen TVs and plunging prices. That foliage the company relying steady sales of mobile phone handsets to make money. Once once more, though, the outlook is bleak, with market researcher Strategy Analytics predicting a 1% decline in global handset sales in 2009. That should add up to Samsung posting its worst quarterly financial performance in a decade later this month. Still, industry watchers warn this is no time for Samsung to retreat. "It’sitting exact for Samsung that the new leadership stronghold investing in new technologies and apparatus fleet enough [in like manner they can greaten place of traffic certain quantity] and benefit from the downturn," says Chang In Whan, most important executive at fund manager KTB Asset Management.

A new generation of leaders at Samsung also raises hopes among shareholder activists that it will accept eagerly international business practices. After last year’s tax scandal, Samsung disbanded its nervous Strategic Planning Office, which Korean prosecutors alleged arranged illegal business deals to benefit the Lee family at the expense of other shareholders. The prosecutors also said the Lees owned more than $4 billion worth of securities in accounts held in other people’s names to avoid paying hefty taxes. "The junior leaders open the way for Samsung to improve transparency," says Kim Sun Woong, tend of the Center for Good Corporate Governance, an unconstrained think-tank.

Original text: http://rss.businessweek.com/~r/bw_rss/asiaindex/~3/514190765/gb20090116_469350.htm