What Is Samsung’s Organizational Structure? Samsung Organizational Structure In A Nutshell

Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).

Department	Structure	Details	Advantages	Drawbacks
Consumer Electronics	Divisional	– Separate divisions for various consumer electronics categories, such as mobile devices, TVs, and home appliances.	– Focused product development and innovation in each category. – Efficient marketing and distribution for consumer products.	– Potential challenges in coordinating efforts across multiple consumer electronics divisions. – Risk of siloed development and competition among internal teams.
Semiconductors	Divisional	– Division dedicated to semiconductor manufacturing and sales.	– Specialization in semiconductor technology and production. – Competitive advantage in the semiconductor market.	– Potential difficulties in aligning semiconductor developments with other product divisions. – Risk of internal competition for semiconductor resources.
Displays	Divisional	– Division focused on manufacturing display panels for various applications.	– Expertise in display technology and manufacturing. – Efficient supply of display components to various product divisions.	– Challenges in coordinating display technology advancements with product development in other divisions. – Risk of resource conflicts related to display production.
Research and Development	Functional	– Functional teams responsible for research and product development. Functional managers oversee R&D activities.	– Focused innovation and technology development. – Efficient product research and development processes.	– Potential disconnect between R&D efforts and market needs. – Challenges in translating research into market-ready products.
Marketing and Sales	Functional	– Functional departments for marketing and sales across product categories. Functional managers lead these departments.	– Specialization in marketing and sales strategies. – Efficient customer engagement and business growth.	– Potential misalignment between marketing/sales and product development. – Limited agility in responding to market changes.
Corporate Functions	Functional	– Functional departments for finance, HR, legal, and IT services. Functional managers oversee corporate functions.	– Expertise in corporate support services. – Efficient handling of financial, legal, and HR matters.	– Limited integration between corporate functions and product development. – Potential misalignment with operational needs.
IT and Software Development	Matrix	– Cross-functional teams with members reporting to both product leaders and functional managers (e.g., IT and software).	– Enhanced collaboration between IT, software, and product development. – Efficient utilization of IT resources.	– Potential conflicts and complexity due to dual reporting structures. – Challenges in resource allocation and decision-making.

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Understanding Samsung’s organizational structure

Samsung’s entire corporate structure revolves around products and is cemented at the company headquarters in South Korea, a country where it employs over 280,000 people.

The company has several divisions based on product category, with each division comprised of multiple business segments. These include:

Consumer electronics – visual display, digital appliances, printing solutions, health and medical equipment.
IT & mobile communications – mobile communications and networks, with Samsung the industry leader in developing an end-to-end product portfolio for 5G commercial services.
Device solutions – memory and system LSI (large-scale integration) with a particular focus on semiconductor design. However, system LSI also encompasses multimedia card controllers, wireless LANs, and display drivers.

Each division provides a specific context in which resources, production, distribution, and sales operate. Each division is also focused on innovation that remains central to Samsung’s vision and mission.

Research and development

Samsung also has a non-product division based on research and development with a network of more than 10,000 personnel around the world. Core priorities include artificial intelligence, robotics, life care & new experiences, security, and next-generation media.

Samsung leadership structure

Despite a predominant divisional organizational structure, Samsung retains a somewhat centralized hierarchical leadership structure. As noted earlier, the corporate headquarters in South Korea is responsible for unifying the company and driving it forward. Instruction is sent down the line to executives in each division and so forth.

However, in recent years, the company has started to move away from aspects of the hierarchical structure toward a meritocratic structure where power is held by individuals who have earned it.

Samsung now has four career level grades:

CL1 – assistant.
CL2 – professional.
CL3 – senior professional.
CL4 – principal professional.

Before the initiatives came into effect, an employee was required to spend eight years at one grade before progressing to the next. As of 2019, the minimum period requirement was replaced with specific tests that would enable superior performers to move through the levels more easily.

To simplify its organizational structure, Samsung also combined the executive vice president and senior vice president roles into one position. The company also actively discourages employees from referring to colleagues by job title via removing markers of rank such as employee ID numbers. If nothing else, these initiatives provide a corporate culture more befitting of a meritocratic organizational structure.

Comparison with Top Related Companies

Apple: Like Samsung, Apple also uses a product-based divisional structure, but it is more streamlined. Apple’s structure is centered around its product lines such as iPhones, iPads, and Macs, similar to Samsung. However, Apple tends to centralize its operations more tightly around its headquarters in Cupertino, focusing intensely on design and innovation.
Google (Alphabet Inc.): Google employs a hybrid organizational structure combining elements of a functional structure with a divisional one based on projects or products. This structure is characterized by a degree of fluidity, enabling Google to be flexible in its project management and innovation efforts. Google’s structure allows for more collaboration across different groups compared to Samsung’s more siloed divisional approach.
Microsoft: Microsoft uses a matrix organizational structure, which is more complex than Samsung’s divisional approach. It integrates functional and product-based divisions, aiming to leverage the benefits of both. This approach helps Microsoft in resource allocation and fosters inter-departmental cooperation, contrasting with Samsung’s more segmented approach.

Similarities and Differences

Similarities: All these companies utilize a divisional element in their structures, which helps in managing a wide range of products and services efficiently. They all emphasize innovation and adapt their structures to support technological development and market expansion.
Differences: Samsung’s divisional structure tends to be more rigid compared to Google’s flexible, project-based approach. Unlike Apple, Samsung has a broader diversification in products, necessitating a more segmented structure. Microsoft’s matrix structure contrasts with Samsung’s by promoting more inter-departmental interaction and less clear divisional boundaries.

Implications

Responsiveness to Market Changes: Samsung’s divisional structure allows for specialized units that can react quickly to changes in specific product markets, though it may lag in company-wide innovation compared to a more integrated structure like Google’s.
Innovation and Cooperation: Microsoft and Google might benefit from greater innovation through cooperative practices across different functions and divisions, something that Samsung’s siloed approach might inhibit.
Centralization vs. Decentralization: Apple’s centralized approach can lead to more cohesive branding and product alignment but might reduce responsiveness in diverse markets where Samsung operates.

Key takeaways:

Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized.
Samsung consists of three product divisions: consumer electronics, IT & mobile communications, and device solutions. Each division has multiple business segments that, in combination with a standalone research and development division, help Samsung carry out its vision and mission.
In recent years, Samsung has moved away from a hierarchical management structure to one that associates employee rank with performance. Under this so-called meritocracy, employees can progress through various positions unencumbered by arbitrary wait periods. The company has also streamlined executive positions and improved corporate culture by discouraging employees by referring to each other based on job title.

Key Highlights

Product-Type Divisional Structure: Samsung’s organizational structure is built around a product-type divisional structure, where the company’s products dictate how resources and business operations are organized.
Divisional Composition: Samsung has three main product divisions:
- Consumer Electronics: Covers visual displays, digital appliances, printing solutions, and health/medical equipment.
- IT & Mobile Communications: Focuses on mobile communications, networks, and leading the industry in 5G product portfolio development.
- Device Solutions: Encompasses memory and system LSI, including semiconductor design, multimedia card controllers, wireless LANs, and display drivers.
Research and Development Division: Samsung has a separate research and development division that works on various priorities such as artificial intelligence, robotics, life care & new experiences, security, and next-generation media.
Centralized and Meritocratic Leadership: Samsung’s leadership structure is somewhat centralized, with headquarters in South Korea playing a significant role in driving the company’s direction. However, the company is moving towards a meritocratic structure, where power is earned based on performance and employees can progress through different positions without arbitrary wait periods.
Career Level Grades: Samsung’s career level grades include Assistant (CL1), Professional (CL2), Senior Professional (CL3), and Principal Professional (CL4). The company has shifted from a time-based progression to a system where superior performers can move through levels more easily through specific tests.
Streamlined Executive Positions: The company has merged executive vice president and senior vice president roles into one position, simplifying its executive structure.
Corporate Culture Changes: Samsung is actively working to improve its corporate culture by discouraging employees from using job titles to refer to colleagues. This aligns with the move toward a more meritocratic structure.