PESTLE ANALYSIS – SOUTH KOREABy Manisha Kunwar , Pawan Pandey and Juanita Kasbe

SOUTH KOREA

• South Korea officially the Republic of Korea is a sovereign country located in the southern part of the Korean Peninsula .

• Total area of 99,392 km2 (38,375 sq mi)[8] and has a population of 50 million.

• The capital and largest city is Seoul, with a population of 9.8 million.

• South Korea is a member of the United Nations, WTO.

• Current President of South Korea is Park Geun Hye from Feb 2013.

•  

SOUTH KOREA

PESTLE ANALYSIS

Current Strengths

Current Challenges

Future Prospect

Future Risks

POLITICAL ANALYSIS Current strengths ▪ Centralization of power▪ Political will for economic reforms▪ Strong foreign relationshipsCurrent challenges▪ Military influence in South Korean politics▪ Political violenceFuture prospects ▪ Confidence building measures with North

Korea▪ Strengthening relations with the EUFuture risks▪ Uneasy relationship with North Korea

ECONOMICAL ANALYSIS Current strengths ▪ Powerful export sector▪ Successful economic reformsCurrent challenges▪ Low level of imports▪ Declining level of FDIsFuture prospects ▪ Competitive tax policy▪ Liberalized service sector▪ Implementation of free trade agreements (FTA)Future risks▪ Nuclear crisis▪ Growing local hatred for foreign companies

SOCIAL ANALYSISCurrent strengths ▪ High wages▪ Highly educated workforce▪ Rapid urbanizationCurrent challenges▪ Low fertility rates▪ Ageing society▪ Low social welfare spendingFuture prospects ▪ Low unemployment rate▪ Rising awareness of human rightsFuture risks▪ Rising power of labor unions

TECHNOLOGICAL ANALYSISCurrent strengths ▪ Robust telecom sector▪ Presence of large global and domestic playersCurrent challenges▪ Scarce natural resources▪ Rising R&D costsFuture prospects ▪ Government policies promoting R&D▪ Growing R&D centers▪ Commercialization of new ideasFuture risks▪ Foreign companies pulling out of the country▪ Over-regulated governance

LEGAL ANALYSIS Current strengths ▪ Regulatory incentives▪ Favorable tax policies▪ An exclusive constitutional courtCurrent challenges▪ Absence of juries▪ Inefficient customs operations▪ Weak IPR enforcementFuture prospects ▪ Judicial system similar to US and Germany▪ Advantage of tax abatements and tax treaties for

FDIsFuture risks▪ Judges quitting for private practice▪ Low rate of students clearing the law examination

ENVIRONMENTAL ANALYSISCurrent strengths ▪ Promotion of national parks▪ Strong governmental intervention to protect

environmentCurrent challenges▪ Limited natural resources▪ Soil erosionFuture prospects ▪ Environmental technology development▪ Eco-businesses and green GDP▪ Promotion of environmental educationFuture risks▪ Rising emissions levels▪ Dam in North Korea

Samsung Town, Seoul, Headquarters

Samsung Engineering , New Delhi, India

SAMSUNG – INTRODUCTION

Samsung means "tristar" or "three stars". The word "three" represents something "big, numerous and powerful"; the "stars" mean eternity

Samsung Group is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul.

Samsung comprises around 80 companies. It is highly diversified, with activities in areas including construction, electronics, financial services, shipbuilding and medical services.

As of April 2011 the Samsung Group comprised 60 unlisted companies and 20 listed companies, all of which had their primary listing on the Korea Exchange stock-exchange.

SAMSUNG - FORMATIONSamsung was formed in 1938 by Lee Byung-chull as a trading company based in Su-dong. The company grew and soon expanded to Seoul in 1947 but left once the Korean War broke out.Samsung entered the electronics industry in the 1960's with the formation of several electronics focused divisionsIn 1980, Samsung entered the telecommunications hardware industry with the purchase of Hanguk Jenja Tongsin.The mobile phone business was grouped together with Samsung Electronics which began to invest heavily in research and development throughout the 1980's. In 1987 with the death of Lee Byung-chull, the Samsung group was separated in to four business groups leaving the Samsung Group with electronics, engineering, construction, and most high-tech products.

1938 – 1958

1969 - 1979

CONTINUED….

Lee Kun-hee joined the Samsung group in 1968 and took over the chairmanship on December 1, 1987

In 1993, Samsung reorganized to focus on three industries, electronics, engineering, and chemicals.

Samsung invested in LCD technology, becoming the largest manufacturer of LCD panels in the world by 2005.

As part of it bio-pharma investment, Samsung formed a joint venture with Biogen, investing $255 million to provide technical development and biopharmaceutical manufacturing capacity in South Korea.

Samsung has also continued to expand in the mobile phone market, becoming the largest manufacturer of mobile phones in 2012.

1980 - 1992

1992

Since 1993

SAMSUNG GROUP - SUBSIDIARIES AND AFFILIATES1. Ace Digitech - Manufacture and sale of

polarizing films2. Cheil Industries – Textile 3. Cheil Worldwide – Marketing 4. Credu – Educational Institution5. Imarket Korea – Industry Material Distributors6. Samsung Card – Credit Cards7. Samsung C&T Corporation – Construction and

Trading 8. Samsung Electro – Mechanics – PCB’s, MLCC’s,

SMPS’s9. Samsung Electronics LCD, LED Panels, Mobile

Phones, Semiconductors, Televisions.10. Samsung Engineering - EPC11. Samsung Fine Chemicals

CONTINUED12. Samsung Fire and Marine Insurance13. Samsung Heavy Industries 14. Samsung Life Insurance 15. Samsung Machine Tools16. Samsung SDI -Semiconductor and Other

Electronic Component Manufacturing17. Samsung Securities18. Samsung Techwin - An aerospace,

surveillance and defence company19. Shilla Hotels and Resorts 20. S1 Corporation

KEY CUSTOMERS Royal Dutch ShellSamsung Heavy Industries will be the sole provider of

liquefiednatural gas (LNG) storage facilities worth up to US$50

billionto Royal Dutch Shell for the next 15 years. United Arab Emirates GovernmentA consortium of South Korean firms – including

Samsung, KoreaElectric Power Corp and Hyundai – has won a deal

worth 40 billiondollars to build nuclear power plants in the

United Arab Emirates. Ontario GovernmentThe government of the Canadian province of Ontario

signed off one ofthe world's largest renewable energy projects, signing a

$6.6bn dealthat will result in 2,500 MW of new wind and solar

energy capacitybeing built.

KEY COMPETITORS LG Corp. SK Group Hyundai Corporation Apple Group Panasonic Corporation Sony Corporation SK Hynix Inc. Seagate Technology Philips Motorola Canon Sony

USP – SAMSUNG GROUP

Innovation R&D Customer preference Quality and Price Product Designs Marketing

Samsung Group – (Geography wise Net Profit) (Q1 – 2013)

•Samsung Electronics America (SEA)- 2,715,594•Samsung Semiconductor (SSI) 3,740,587•Samsung Electronics Vietnam (SEV) 5,769,437 •Samsung Electronics Huizhou (SEHZ) 4,500,864•Samsung Asia Private(SAPL) 384,199 •Samsung India Electronics (SIEL) 1,574,164 •Samsung Electronics Taiwan (SET) 1,117,421•Samsung Electronics Mexico (SEM) 648,211 •Samsung Electronics Hong Kong (SEHK) 548,723 •Samsung Electronics Hungarian (SEH) 817,539

SAMSUNG ELECTRONICS – SALES TURNOVER

The second quarter of 2013. Consolidated sales: Approximately 57 trillion

Korean won (Range: 56 – 58 trillion Korean won) Consolidated operating profit: Approximately

9.5 trillion Korean won (Range: 9.3 – 9.7 trillion Korean won) 2013 1Q and 2012 2Q consolidated figures

(in trillion won) 2013.1Q 2012.2Q

Sales 52.87 47.60

Operating profit 8.78 6.46

CSR - SAMSUNG GROUP

In 2009, Samsung launched the company’s Corporate Social Responsibility initiative – ‘Samsung Hope Project’ with projects in the areas of education, culture, sports, social welfare and community development emphasising on innovations for development of the community including education, technology, engineering and IT technical training.

Samsung Hope for Children, an initiative designed to help under-privileged children through e-learning centres.

Innovations for development of the community, a partnership between Samsung and various educational and media agencies to support grassroots innovation. Samsung Innovation Award with IIT, Delhi and Samsung Innovation Quotient which recognises India’s best grassroot innovators from across the country

CSR - SAMSUNG GROUP Hope for Culture represents Samsung’s tribute to the rich

Indian cultural heritage through Tagore Literature Awards that recognises the best literary contributions in 24 Indian regional languages. Samsung is partnering with the Sahitya Akademi for the Tagore Literature Awards. Additionally, Samsung partners with INKO to present the Samsung Women’s International Film Festival that gives voice and expression to the perspective of women and celebrates her spirit through the medium of Cinema.

Sports Sponsorship is an ongoing initiative wherein Samsung supports top ranking athletes across individual sports disciplines with their training expenses while they prepare for the Asian or the Olympic Games. Samsung is also the Sponsor of the Indian team to the forthcoming London Olympics.

Samsung donates around US$100 million per annum to the Samsung Medical Center a non-profit healthcare provider founded by the group in 1994. Samsung Medical Center incorporates Samsung Seoul Hospital, Kangbook Samsung Hospital, Samsung Changwon Hospital, Samsung Cancer Center and Samsung Life Sciences Research Center. Samsung Cancer Center, located in Seoul, is the largest cancer center in Asia

Corporate Governance - Samsung Securities Established Its’ “Samsung Securities Corporate Governance Charter”, Including A Comprehensive Preamble, Five Major Subjects, And 20 Specific Items

Item Note

Employee ethics establishment -

Board of directors(BOD) 4 inside directors and 5 outside 

composition (outside director 55.6%)

directors (as of 2012.6.5)

BOD operation rules establishment Established BOD rules

Regular BOD meetings Holds “regular BOD meeting” once a quarter

Committee to fairly recommend BOD candidates

Established the outside director candidate recommendation

committeeLiability insurance for directors out

of company expensesSigned up for Director’s & Officer’s

Liability InsuranceAudit committee 1 inside director and 3 outside

directors (including financial/accounting expert)

Audit committee meeting Holds “regular audit committee meeting”

once a quarter

Independency of external auditor -

Clear confirmation on business reports and others

Confirmed by CEO and executive in charge

Explanation about differences with best practice

Explained on the website

ETHICAL PRACTICE Since 2008, Providing cyber education on ethical

management for all employees once a year. After 2010, Tested employees for level of

understanding of ethical management and re-tested those found to lack enough understanding

Installed the Internal Transaction Committee under the BOD in February 2012.

Declaration of code of ethics and employees' pledge to practice ethical management 

Established code of ethics listing six values as the standards for employees' thoughts and behavior and also continued the efforts to build consensus on ethical management by getting our employees to sign on the ethical management compliance pledge each year.

SAMSUNG … SUCCESS STORY…… Entered the semiconductor business late in 1983,

Samsung is now the world's 2nd largest semiconductor distributor behind Intel.  

The turning point in the company's history was in February of 1983 when Lee Byung Chul, the CEO of Samsung Group made a push towards a large investment in memory chips and was determined to break into the semiconductor market (Kim, 1998).  

Lee Byung Chul recognized that there would be a need in the future for more memory chips and he identified that this was going to be the trend.

Samsung realized that the semiconductor business was only in its initial stage of Foster's S-curve and that with careful planning and the right product, they can still capture market share from established companies.  

SAMSUNG – SETBACK

Mobile World Congress (MWC), Samsung touted its new Galaxy Note, but mentioned that the company isn't exactly thriving in the tablet arena.

Samsung has struggled trying to catch up with Apple's ever-popular iPad, which originally released back in April 2010.

Apple originally sued Samsung for patent infringement regarding devices like the Galaxy S 4G, pic 4G, Nexus smart phones and the Galaxy Tab 10.1

Apple managed to successfully ban the Galaxy Tab 10.1 in both Australia and Germany, but Samsung pulled a few punches of its own and lifted the ban in Australia last December.

SAMSUNG – INNOVATION AND R&D

Innovation is crucial to Samsung's business as new technologies are being constantly introduced to the market.

Around 50,000 employees in50 research facilities are engaged in R&D division of Samsung

The Samsung Advanced Institute of Technology (SAIT), Samsung's technology competitiveness in core business areas, identifies growth engines for the future, and oversees the securing and management of technology. 

Each year at least 9% of the sales revenue is invested in R&D activities. 

Samsung centres in Korea and18 more in nine other countries, including the United States, the United Kingdom, Russia, Israel, India, Japan and China, as well as other research centres and universities

FUTURE GLOBAL CHALLENGES

Strong competition from Apple and other mobile companies.

Patent and Legal Issues Political Violence Rising R&D cost

Thank You !

Gamsahabnida !