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.
Table of Contents
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.
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.
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Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
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).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
