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. |
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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Read Also: Samsung SWOT Analysis What Is A SWOT Analysis.
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