Former Samsung Group Chairman Lee Kun-hee has returned to the conglomerate to head Samsung Electronics. Nearly two years ago, he released a public apology and retired after being indicted in a tax evasion and breach of trust case.
Lee decided to return because the groups executives felt the conglomerate would fall behind its competitors without properly responding to rapidly changing economic conditions. The global business climate has significantly changed in the two years Lee was out of Samsung. The U.S.-led financial crisis in 2008 rapidly spread throughout the world, forcing the collapse of the top American carmaker General Motors. The worlds largest carmaker Toyota has also faced an unprecedented crisis due to a massive vehicle recall. In short, global conglomerates that have long been stronger than Samsung have tumbled.
The Samsung Groups presidents asked Lee to return in the belief that his strong leadership is required for the group to secure global business opportunities in a crisis. After considering the request for around a month, Lee decided to return. A decade ago, Samsung was like a mom-and-pop store whose size was a fifth of what it is now. It is possible for Samsung to revert to the past, he said.
In 1993, Lee announced his new management plan, saying, You cannot survive without change. You have to change everything except your wives and children. At the time, Samsung Electronics products could not compete with those of Japanese companies such as Sony in the U.S. market. His new management paradigm helped Samsung Electronics overcome a crisis and rise to the worlds largest electronics maker. In the wake of the latest crisis 17 years later, Lee gave this warning: Most businesses and products Samsung represents now will disappear within 10 years.
Samsung needs a second new management movement led by Lee. In 2008, Samsung Electronics accounted for 63 percent (106 billion U.S. dollars) of its parent groups sales (168 billion dollars). Yet the company is being trailed closely by its global competitors in electronics. Samsung Electronics has failed to launch outstanding items to lead the worlds household appliance market. Its mobile phones have been overwhelmed by iPhone and Google Phone in the smartphone market. Certain voices say Korea might lose its power in the global IT industry. Lee and Samsung Electronics should deal with the numerous challenges to help Korea regain its reputation as the worlds IT powerhouse.
In the past, Samsung Electronics learned lessons from Japanese companies to grow. Yet now, Japanese companies are struggling to emulate the Korean giant. If Samsung Electronics wants to stay the worlds biggest electronics maker, it should blaze its own pioneering path instead of copying other companies. Considering Toyotas recall fiasco, Samsung Electronics should also listen to consumers and seek transparent management.