Emerging Markets: Samsung’s Global Strategy Group

Founded in 1938, Samsung Group is South Korea’s leading conglomerate. It has 270,000
employees in 470 units in 67 countries, with $227 billion in annual revenues. The flagship company
within Samsung Group is Samsung Electronics Corporation (SEC).With $136billionrevenuesin
2010(more than Apple and Sony combined), SEC is the largest electronics firm in the world. In
addition to SEC, other major Samsung Group companies include Samsung Life Insurance (the 13th
largest life insurer in the world), Samsung C&T Corporation (one of the world’s largest developers
of skyscrapers and solar/wind power plants), and Samsung Heavy Industries (the world’s largest
shipbuilder). Samsung’s performance has been impressive. Despite the Great Recession, SEC’s
profits have been higher than those of its five largest Japanese rivals (Sony, Panasonic, Toshiba,
Hitachi, and Sharp) combined. In 2010, SEC achieved record profits of $14 billion, compared
with$12billion profits for Intel and less than $1 billion profits for Panasonic as well as $3.2 billion
losses for Sony.
Clearly, Samsung has done something right. However, it has not been easy. To increasingly
compete outside Korea, Samsung needs to attract more non-Korean talents. But given its
traditionally rigid hierarchical structure and the language barrier, its efforts to attract and retain
non-Korean talents had often been disappointing. In response, Samsung Group headquarters in
1997 set up a unique internal consulting unit, the Global Strategy Group, which reports directly to
the CEO. Members of the Global Strategy Group are non-Korean MBA graduates from top Western
business schools who have worked for leading multinationals such as Goldman Sachs, Intel, and
McKinsey. They are required to spend two years in Seoul and study basic Korean. The group’s
mission, according to its website, is to “(1) develop a pool of global managers, (2) enhance
Samsung’s business performance, and (3) globalize Samsung.”
Global Strategy teams work on various internal strategy projects for different Samsung
companies. Each team has a project leader, which gives the individual an opportunity to take on a
leadership role in a high-level consulting project much earlier than a typical consulting career
provides. Each team has one to two global strategists. It also has a project coordinator, who is a
senior Korean manager acting as a liaison between the team and the management of the (internal)
client company. On average, projects last three months and typically involve some overseas travel.
Starting with 20 global strategists in the class of 1997, nearly 400 projects have been completed in
2
15 years. These projects help global strategists form informal ties and expose them to the
organizational culture. After two years, global strategists would “graduate” and be assigned to
Samsung subsidiaries, many of which are in their home countries.
Despite good-faith efforts by both Korean and non-Korean sides, the success of the Global
Strategy Group is anything but assured. Overall, cultural integration is a tough nut to crack. Of the
208 non-Korean MBAs who joined the group since its inception, 135 were still with Samsung as of
2011. The most successful ones are those who have taken the greatest pains to fit in to the Korean
culture, such as eating kimchi and drinking Korean wine at dinner parties. Before the establishment
of the Global Strategy Group, not a single non-Korean MBA lasted more than three years at SEC.
With the Global Strategy Group as a cohort group, one-third of the non-Korean MBAs in the first
class of 1997 were still with SEC three years later (in 2000). Over the next decade, the retention
rate went up to two-thirds. Three experts noted how the non-Korean members of the Global
Strategy Group have slowly but surely globalized Samsung’s corporate DNA:
The effects of these employees on the organization have been something like that of a steady
trickle of water on stone. As more people from the Global Strategy Group are assigned to SEC,
their Korean colleagues have had to change their work styles and mind-sets to accommodate
Westernized practices, slowly and steadily making the environment more friendly to ideas
from abroad. Today, SEC goes out of its way to ask the Global Strategy group for more newly
hired employees.