Samsung Looks to Reshape Itself Into a More Flexible Company: Report

By Todd R. Weiss  |  Posted 2016-03-27 Print this article Print
Samsung, revenue, startup, innovation, Apple, smartphones, televisions, consumer goods, flexibility

The idea is to remake the monolithic Samsung into a company with startup energy and thinking, while maintaining its core businesses.

Samsung wants to make itself nimble, while also mirroring the energy and flexibility of a startup, as it works to compete more effectively in the world marketplace against key rivals including Apple. To do that, the company is about to revamp its business processes in an attempt to reshape its slow-moving and conservative structure of the past.

That is what's behind Samsung's newly announced moves to "move away from a top-down culture and towards a working environment that fosters open dialogue," according to a March 24 story by Reuters. The company's business leaders will sign a pledge to work toward making such changes, will reduce the number of staff layers in its hierarchy, and will move to increase online discussions between business division heads and employees in an attempt to make Samsung more flexible, the story reported.

"We aim to reform our internal culture, execute as quickly as a startup company and push towards open communication and continuously innovate," the company told Reuters in a statement.

Samsung has been battling a pattern of sluggish sales over the last several quarters as it competes in some very competitive markets, including smartphones, televisions and DRAM chips, according to earlier eWEEK stories.

In January, Samsung reported fourth-quarter 2015 revenue that was up slightly, while its operating profit was down compared with the prior quarter. Samsung had an operating profit of $5.05 billion (6.14 trillion Korean Won) for the fourth quarter of 2015, which is down from the $6.4 billion the company posted in the third quarter. The company's Q4 2015 consolidated revenue was $44 billion (53.32 trillion KRW), which is up from the 51.68 trillion KRW reported in Q3. The fourth quarter ended on Dec. 31, 2015.

For the fourth quarter of 2014 ended Dec. 31, Samsung posted revenue of $48 billion, which is an increase of 11 percent from Q3, when the company posted $43.2 billion in sales. Net profit for Q4 was $4.8 billion, up 26.3 percent from the $3.8 billion that was posted in Q3, according to figures the company released on Jan. 29.

For the full year of 2015, Samsung reported total revenue of $166 billion (200.65 trillion KRW) and an operating profit of $22 billion (26.41 trillion KRW). That compares to total revenue of 206.21 trillion KRW for the full year of 2014 and a full year 2014 operating profit of 25.03 trillion KRW.

Samsung is continuing to look for ways to increase profitability in its existing business units while also focusing on expanding markets such as the Internet of things (IoT), particularly in the smart home and smart health market segments.

It's outlook for the rest of 2016 likely includes "single-digit percentage growth in both the smartphone and tablet categories amid softening demand and intensifying competition," the company said in January.

The rapid declines that Samsung continues to experience in smartphone profits and a dearth of new businesses to drive growth are key reasons for its moves to "reform its military-style working culture to foster innovation," Reuters reported.

One new business direction that Samsung is apparently pursuing is artificial intelligence, according to a March 23 story by Bloomberg, which reported that the company is "actively looking" to acquire developers of artificial intelligence to create new revenue streams as soon as possible.

Samsung "wants to morph into more of a software-driven company," Executive Vice President Rhee In Jong told Bloomberg in an interview. "We are actively looking for M&A targets of all sorts in the software area," said Rhee. "We are open to all possibilities, including artificial intelligence. Intelligence is no longer an option—it is a must."


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