Samsung Electronic Corporation: Governance of Chaebols

CASE: SAMSUNG ELECTRONIC CORPORATION: GOVERNANCE OF CHAEBOLS Copyright: Prof. Florencio Lopez-de-Silanes Professor Florencio Lopez-de-Silanes and Rakhi Kumar, Yale MBA02 prepared this case as the basis for class discussion rather than to illustrate the effective or ineffective governance of an organization. Prof. Florencio Lopez-de-Silanes INTRODUCTION Case: Samsung Electronics Prior to the Asian currency crises, South Korea was an investment destination for several institutional investors and emerging market funds. Throughout the early nineties the country experienced an economic boom.South Korean conglomerates, locally know as chaebols, had diversified into various industries from cars to microchips. Samsung Electronics Corporation (Samsung Electronics), a rising star in the Samsung Chaebol was considered to be a high growth company. However, in 1997, the Asian currency crises magnified the problem of the Chaebol structure and highlighted the need for governance reforms. By 1999, a shareholder rights activist in South Korea – Prof. Hasung Jang had taken up the cause of minority shareholders of Samsung Electronics.With the help of foreign institutional investors, he planned to fight for governance reforms in South Korea. As a corporate governance specialist, Samuel Smith, had been contracted by a large foreign institutional investor to help reform Samsung Electronics. KOREAN CHAEBOLS: Establishment, growth and structure. In order to accelerate economic growth in the 1970’s, the Korean government formulated industrial policies that encouraged investment in heavy and chemical industry (HCI). Funded largely by government-controlled banks, affluent families took advantage of the liberal policies and set up ompanies in these industries. By the end of the 1970’s approximately 80 percent of fixed investment in the manufacturing sector was in HCI businesses. Between 1962 and 1982, annual growth averaged 8. 4%, although by the end of the 1970â€⠄¢s production efficiency in priority sectors was falling. As a result, there was excessive investment in the HCI industries and little allocation efficiency in the capital markets1. Due to over investment in the HCI industry and small domestic markets, companies began diversifying into unrelated businesses, giving birth to the Korean Chaebols.Government intervention in resource allocation proved to be very costly. Enterprises that had access to preferential policy loans or tax incentives tended to expand their businesses The Institute for International Economics – Financial Services Liberalization in the WTO: Case Study of South Korea 1 1 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics rapidly without careful appraisal of investment projects. Since the government largely made lending decisions, creditor banks had little incentive for credit evaluations or loan monitoring.As a result, firms were heavily leveraged and borrowed from informal credit markets as they we re usually pressed for working capital. This structural weakness put the economy on the verge of a financial crises in early the 1970s and then again in the 1980s2. However, public purse bailing out of large enterprises became the norm and people were made to believe that chaebols were too big to fail. When the government decided to open up the South Korean economy, many of the protective measures that local companies had enjoyed during the developmental era were removed.Companies that had expanded into unrelated businesses found that they no longer had access to government capital. Initially, banks were also not interested in financing these projects, nor did they have the expertise to evaluate these new high-risk businesses. Hence, business groups started creating their own group wide internal capital markets. Transfer pricing, cross-shareholdings and cross-guarantee of debts were some of the mechanisms employed by chaebols to fund expansion. They pooled any funds available to the subsidiaries to supplement outside funding of new projects.Operations of these internal finance markets were not necessarily based on efficiency in resource allocation but were often driven by the interests and concerns of the controlling families. 3 Many Chaebols invested overseas and ‘globalization’ was the new theme. However, the globalization strategy was not well planned. Chaebols held onto the management strategy that they had been practicing over the last thirty years: growth in size ignoring profitability; financial structure with high debt-to equity ratio and cross debt guarantee among affiliated companies. By 1997 there were over fifty chaebols in South Korea, each with a myriad of affiliated companies all linked to one another through a complex network of cross-holdings. Ownership and affiliation details of twenty chaebols are provided in Exhibit 1. Family-Based Business Groups: Degeneration of Quasi-Internal Organizations and Internal Markets in Korea by Sa ng-Woo Nam, December 2001. 3 Ibid. 4 Corporate Governance and Economic Development: The Korean Experience by Ha Sung Jang. 2 2 Prof. Florencio Lopez-de-Silanes THE SAMSUNG GROUP: It is all in the family.Case: Samsung Electronics Founded in 1938 by Mr. Byung Chul Lee, Samsung Group’s original line of business was exporting dried fish, vegetables and fruits produced around Korea to Manchuria and Beijing in China. Within a few years of incorporation, the company expanded its operations to include manufacturing and sales when it set up a flourmill and bought confectionary machines. In the 1970’s it diversified into the petrochemical, electronics and heavy industries. By early 1990’s, the Samsung Group had grown into the fourteenth largest company in the world.It had diversified into four primary industries, and had over twentyfive affiliated companies. Like most Korean companies, the Samsung Group structure developed into a confusing maze of cross-ownership among af filiated companies. Exhibit 2 provides a list of affiliated companies in the Samsung Chaebol while Exhibit 3a and 3b shows the complex crossownership structure among the affiliated companies. For example, according to Exhibit 3a, affiliated companies owned 15. 83% of Samsung Electronics. Exhibit 3b provides the break up of ownership between affiliates.Therefore, Samsung Company owns 4. 45% of Samsung Electronics, Samsung Life Insurance owns 8. 16% and so on. By 1997, combined annual revenues of all the businesses in the group were close to USD 100 billion, with profits reaching USD 290 million. The Samsung Group constituted approximately 10% of the total market value of all companies listed on the Korean stock market. However, like all other chaebols, its debt-to-equity ratio hovered around 365%. SAMSUNG ELECTRONICS CORPORATION: Governance of Cheabols. Samsung Electronics was established in 1969.By the mid 1990’s, it had strategically invested in research and development of D RAM chips and had grown into a billion dollar company. Exhibit 4 shows the contribution made by Samsung Electronics to the overall revenues and profits of the Samsung Cheabol. By the late 1990’s, Samsung Electronics had 24 production subsidiaries, 35 sales subsidiaries and 20 branch offices around the world including North America, Europe, Southeast Asia, Central Asia, China and Latin America. It 3 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics managed four strategic businesses in the fields of Home, Mobile, Office Network and Core Components.However, in 1997, excess production capacity in the microchip industry lead to a downward spiral in chip prices. Profits at Samsung Electronics plunged to new lows. The Asian Currency crises compounded the problems facing the company. By late 1997, the company’s debt totaled 13 trillion won (approximately USD 9 billion) and more than 70 percent of it was in foreign currency loans5. The financial run on the economy by f oreign institutional investors saw the country’s currency tumble 10. 6 percent. Domestic interest rates on threeyear corporate bonds hit 30. 1 percent.The US rating agencies, in addition to downgrading the sovereign debt to â€Å"junk bond† status, also lowered the credit worthiness rating for several of the largest South Korean companies including Samsung Electronics6. The company’s share prices reflected the macro and micro economic turmoil faced by the company. Exhibit 5 provides daily share prices of the Samsung Electronics stock on the Korean stock exchange for a 15-month period starting September 1996. However, a liner trend line indicates that, by and large, the share price was declining marginally but was above the 50,000 won mark.After a period of negative results, minority shareholders started questioning governance practices of the company. They alleged that Samsung Electronics had neither internal or external corporate governance mechanism which acte d as checks and balances and that all management decisions were made taken by the Chairman. The internal mechanisms such as Board of Directors and Auditors, did not function properly at least when it came to monitoring the Chairman. For example they questioned the board’s decision of acquiring shares of a firm, Ichon Electric, whose financial stability was shaky.This acquisition cost Samsung Electronics 27. 6 billion won when the company went bankrupt a few years later. 7 When things starting going wrong, neither the Chairman nor the Board of Directors took any responsibility for failed investments or even for illegal activities. Instead the chaebol lobby issued a report attacking minority activism. They said, â€Å"Minority shareholders’ rights to demand compensation should be respected only in the event of embezzlement and other illIR on the net: How they did it at Samsung Electronics. http://www. ironthenet. com/feature. sp? current=1&articleID=2289 6 Washington Po st Foreign Service: South Korea Takes Three More Punches by Steven Mufson. 7 Korean IT News: Civic Group Challenges Samsung Chairman’s Alleged Mismanagement by Kim Deok-hyun. 5 4 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics intentioned behaviors. Managerial misjudgments should not be the subject of criminal liabilities. Activism can also harm the interests of majority shareholder and decision-making by management. † 8 In 1998, the Board of Directors of Samsung Electronics consisted of twenty-three members.This number had been trimmed from the previous year when the board comprised of fortythree directors. Exhibit 6 provides a profile of the directors on the board of Samsung Electronics. Some shareholders believed that accounting manipulation and improprieties had become standard practice and company funds had been used to make political contributions in the Chairman’s name. A minister in the Korean cabinet faced corruption allegation that he earned USD 1. 4 million when he was given an interest-free loan from Samsung Electronics and acquired the Company’s shares at a discount rate while he was an ‘outside’ director on the company board. External mechanism such as markets for corporate control also did not exist and legal protection of shareholder’s rights was limited. 10 Courts in Korea did not have experience of dealing with corporate governance cases and often their rulings seemed to go soft on the guilty. For example, the Suwon District Court ordered Samsung's Chairman Lee to return to the Samsung companies 7. 5 billion won in damages on charges of providing bribes to former president Roh Tae-woo. However, the court did not demand that Lee take legal responsibility for the two mismanagement cases of his group's ubsidiaries, saying he did not participate in the decision-making. 11 Samuel Smith wondered if the allegations of the minority shareholders held any merit. Internal and external economic fo rces had not changed much in the last decade, yet it was only after the Asian currency crisis that these allegations were being made. The Korean Herald: Chaebol face tough attacks from minor shareholders by Yoo Cheong-mo: February 25,1999. 9 AFX News Limited: South Korean education minister resigns amid corruption allegations; August 31, 2000. 10 Corporate Governance and Economic Development: The Korean Experience by Hasung Jang. 1 Korean IT News: Civic Group Challenges Samsung Chairman’s Alleged Mismanagement by Kim Deokhyun. 8 5 Prof. Florencio Lopez-de-Silanes HASUNG JANG: The voice of minority shareholders. Case: Samsung Electronics Dr. Hasung Jang is a well know minority shareholder rights activist in South Korea. He received his MA in economics from the New York State University and a Ph. D. in finance from the Wharton School. On returning to South Korea, he joined the Korean University as a professor of finance and the director of the Center for Finance and Banking Res earch.As the Chair of the Participatory Economy Committee, a minority shareholder protection civil group, under the umbrella of the Peoples Solidarity for Participatory Democracy, Dr. Jang took up the cause of shareholder rights in Korea. He undertook investigations to evaluate the governance of chaebols and financial dealings among affiliated companies. Dr. Jang targeted Samsung Electronics and made allegations of self-dealing transactions. In particular he spoke about a transaction dated 24 March 1997, when Samsung Electronics made a private placement of unsecured convertible bonds worth 60 billion won (US $46. million). He was troubled by the fact that the bonds had been sold to company insiders. The Chairman’s son had purchased 45 billion won worth of bonds and another Samsung affiliate had purchased the remaining bonds worth 15 billion won12. Dr. Jang alleged that this issue was at unfavorable terms for the company and called into question the price of the bonds. On thei r part, company executives explained that Samsung Electronics was badly in need of fund and that international funding, which previously was the main source of capital had dried up after the Asian currency crises.Further, as the company was finding it extremely difficult to raise money from domestic financial institutions they had little choice but to privately place the bonds. Besides the amount raised was less than one percent of existing long term loans. Dr. Jang also alleged that Samsung Electronics had both directly and indirectly funded the Samsung Groups’ doomed venture into the car industry at the expense of minority shareholders. Samsung Electronics had acquired a 21. 1% stake in Samsung Motors at the acquisition cost of 170 billion won (USD 106 million).The indirect investment of Samsung Electronics into Samsung Motors was in the form of a joint investment agreement between 12 Nascent Stages of Corporate Governance in an Emerging Market: regulatory change, sharehold er activism and Samsung Electronics by Hasung Jang and Joongi Kim. Corporate Governance Volume 10 Number 2 April 2002. 6 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics an Ireland-based paper company called Pan-Pacific Industrial Investments (PP) and Samsung Electronics (and two of its affiliated companies). At first lance the PP agreement looked like a direct investment into Samsung Motors by a foreign entity (PP) in accordance with Korean laws regulating foreign exchange. However, under the terms of the joint venture agreement, Samsung Electronics had guaranteed PP a certain rate of return through put and call options within a specified redemption period, on Samsung Motor shares it (PP) owned. This arrangement was made in addition to bridge loans made by Samsung Group to PP. Dr. Jang alleged that that this transaction was not a clear direct investment and in fact violated legal requirements for other types of transactions.Samsung Electronics rebutted the allegations and explained that the put and call options were just clauses in the agreement put there to provide additional security for PP. The Company was more like a third party in the transaction and the agreement did not have any financial implications for the shareholders. SAMUEL SMITHS TASK 1997 had been a troubled period for Korean companies. The country had experienced a severe economic shock, which had practically destroyed the economic structure that had developed over the past four decades.It was confusing and upsetting times for companies and investors, all of whom has suffered tremendous loss. Sam had to objectively analyze the allegations made by the minority shareholders and check for fundamental problems at the company. Naturally, dealing with an emerging market came with its challenges. For one, economic data was scarce and very little corporate information was publicly available. As Sam sat down to prepare for his meeting with his client he made a list of questions he needed to a nswer. 1. What are the benefits and disadvantages of the Korean chaebol structure?In particular what governance issues can arise due to this structure? 2. Analyze the capital structure of Samsung Electronics. Compare it with the capital structure of a company in the similar line of business (primarily manufacture of chips) from another developed country and comment on the differences. 7 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics 3. If Samsung Motors makes an after tax profit of USD100 million, what share of that would go to the Lee family (owners)? What percentage of Samsung Motors do they directly own? Note: You do not have to provide the exact number. A good approximation will be adequate. ) 4. The client wants to recommend governance changes with special emphasis on the board of directors. Evaluate the current board of Samsung Electronics. What are the strengths and weaknesses in the current board composition? How many directors can be classified as non-executive? How many can be classified as independent? What are your criteria’s for assessing director independence? Do you think changes need to be made to the current board composition?If no – why not, if yes – what changes would you recommend? 5. Based on the company’s financials as of December 31, 1997 and publicly available information, investigate the allegations made by Dr. Jang. Do you think the convertible bond issue was a self-dealing transaction? How would you prove that claim? What evidence do you have on you claim? (Note: you are not expected to do a DCF. ) 6. Does the agreement with the Pan-Pacific Industrial Investment resemble a simple direct investment or something else? Why was the guarantee clause included in the contract? Does it change the instrument?If you were on the Audit committee of the company what questions would you ask about this transaction? 8 Prof. Florencio Lopez-de-Silanes Exhibit 1: Share Ownership and Affiliates of Chaebols Contro lling Family Ownership Ownership Affiliates No. of (%) (%) Affiliates 5. 00 20. 98 8. 50 36. 05 6. 49 6. 61 13. 88 6. 45 12. 62 27. 73 5. 72 4. 57 18. 56 23. 91 21. 22 16. 31 2. 48 15. 33 14. 36 5. 33 6. 38 11. 29 30. 20 28. 57 30. 11 35. 74 24. 35 29. 60 43. 19 35. 95 22. 94 20. 36 17. 07 37. 92 18. 64 28. 35 37. 70 14. 20 21. 29 25. 64 25. 52 29. 76 30. 09 43. 24 44 28 27 22 18 17 17 15 13 12 12 12 11 11 10 10 8 6 6 5 5 3Case: Samsung Electronics Cheabol LG Hyundae Sam-sung Lotte Dae-woo Han-Wha Doo-San Ssang-Yong SK Han-Jin Dae-Rim Kolon Hyo-Sung Han-il Dong-Kuk steel Kum-Ho Kia Sam-mi Dong-Bu Koryo textile Hai-Tai Kukdong Const No. of listed Affiliates 8 9 12 3 7 6 5 7 3 5 5 4 2 5 4 5 2 2 5 1 2 2 Notes: Data as of 1989 with the exception of LG (1992) Source: Business Groups in China Compared with Korean Chaebols by Keun Lee and Wing T. Woo 9 Prof. Florencio Lopez-de-Silanes Exhibit 2: Affiliated companies within the Samsung Group Industry Electronics Case: Samsung ElectronicsAff liated Companies Samsung Electronics Samsung Electro-Mechanics Samsung SDI Samsung Corning Samsung SDS Samsung Networks Samsung Corning Precisions Glass Samsung Heavy Industries Samsung Techwin Samsung General Chemicals Samsung Petrochemicals Samsung Fine Chemicals Samsung BP Chemicals Samsung Life Insurance Samsung Fire & Marine Insurance Samsung Card Samsung Securities Samsung Capital Samsung Investment Trust Management Samsung Venture Investment Samsung Engineering Cheil Industries Samsung Everland Shilla Hotel & Resorts Cheil Communications SI Corporation Samsung Lions Samsung Medical CenterMachinery & Heavy Industries Chemicals Financial Services Miscellaneous Note: This table shows the most important affiliate companies within the Samsung Group for the period of interest. 10 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics Exhibit 3a: Ownership structure of Companies in the Samsung Chaebol. (all figures in %'s) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2 1 22 23 Name of Firms Samsung Electronics Samsung Display Devices Samsung Co.Samsung Motors Samsung Heavy Industries Samsung Electro-mechanics Samsung Life Insurance Samsung Aerospace Industries Cheil Wool Textile Samsung General Chemicals Samsung Precision Chemicals Samsung Corning Hotel Shilla Samsung Securites Samsung Engineering Samsung Winners Card SI Corporation Samsung Everland Samsung Factoring Financing The Joong-Ang Daily News Samsung Petro-Chemicals Samsung Commercial Motors Samsung Fire & Marine Insurance Owner Family 5. 41 2. 32 Directors Non-profit & foundation Managers 0. 13 2. 44 0. 49 0. 02 0. 16 0. 19 0. 13 30. 60 0. 08 0. 46 25. 00 0. 05 0. 10 0. 74 0. 1 0. 64 6. 20 0. 06 SelfOwned 3. 52 2. 89 5. 17 Total of Affiliate Firms 15. 83 19. 77 19. 55 38. 36 27. 35 27. 54 2. 25 26. 47 2. 20 89. 39 39. 15 49. 36 12. 67 22. 33 16. 03 90. 27 22. 48 23. 99 100. 00 14. 92 36. 33 100. 00 13. 05 1. 42 0. 03 3. 00 15. 00 5. 00 3. 23 0. 85 0. 30 0. 84 31. 20 1. 35 0. 01 6. 23 67. 30 41. 80 0. 36 4. 50 0. 68 3. 98 Source: Business Group in China Compared with Korean Cheabols by Keun Lee and Wing T. Woo 11 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics Exhibit 3b: Detailed Break-up of Affiliate Shareholding Provided Above (all figures in %'s)Decomposition of shares by major affiliates No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Name of Firms Samsung Electronics Samsung Display Devices Samsung Co. Samsung Motors Samsung Heavy Industries Samsung Electro-mechanics Samsung Life Insurance Samsung Aerospace Industries Cheil Wool Textile Samsung General Chemicals Samsung Precision Chemicals Samsung Corning Hotel Shilla Samsung Securites Samsung Engineering Samsung Winners Card SI Corporation Samsung Everland Samsung Factoring Financing The Joong-Ang Daily News Samsung Petro-Chemicals Samsung Commercial Motors Samsung Fire & Marine Insurance 2 3 4. 45 5 6 7 8. 16 5. 39 6. 22 8 9 0. 61 0. 09 0. 07 0. 60 14 0. 01 0. 01 13. 24 18 0. 15 0. 28 1. 24 20 0. 45 23 2. 00 3. 19 10. 87 21. 11 18. 92 21. 92 8. 13 3. 82 9. 31 48. 36 5. 72 16. 03 54. 37 10. 40 12. 74 7. 45 0. 28 2. 48 6. 08 2. 56 4. 92 5. 59 7. 75 2. 20 0. 03 0. 12 25. 90 0. 90 3. 51 2. 25 0. 33 0. 30 3. 44 10. 14 37. 79 6. 20 10. 28 0. 29 0. 21 1. 47 14. 40 11. 39 1. 89 25. 00 3. 92 10. 00 21. 50 3. 45 1. 00 6. 95 10. 62 4. 75 5. 49 9. 95 5. 00 0. 25 2. 50 100. 00 11. 49 8. 50 16. 40 0. 13 17. 10 1. 01 4. 75 9. 93 1. 56 Source: Business Group in China Compared with Korean Cheabols by Keun Lee and Wing T. Woo 12 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics Exhibit 4a: Contribution of Samsung Electronics (parent company only) to Samsung Group. All figures in Billion Won Samsung Electronics (parent company) 1997 1998 20,084 313 20,776 13,806 6,970 1999 26,118 3,170 24,710 11,378 13,332 1997 Samsung Group Samsung Electronic (parent co. ) as a % of Samsung Group 1999 106,730 2,511 133,213 101,023 32,190 1997 11. % 25. 5% 12. 3% 10. 6% 22. 7% 1998 23. 4% 131. 5% 19. 1% 15. 4% 36. 3% 1999 24. 5% 126. 2% 18. 5% 11. 3% 41. 4% 1998 85,788 238 109,022 89,839 19,183 Sales Net Income Assets Liabilities Shareholders Equity Source: Samsung Website 18,465 124 23,066 17,236 5,830 161,448 487 187,824 162,120 25,704 Exhibit 4b: Contribution of Samsung Electronics (consolidated basis) to Samsung Group. All figures in Billion Won Samsung Electronics (consolidated) 1997 Sales Net Income Assets Liabilities Shareholders Equity Source: Samsung WebsiteSamsung Group Samsung Electronic (parent co. ) as a % of Samsung Group 1999 106,730 2,511 133,213 101,023 32,190 1997 14. 0% -125. 3% 17. 1% 16. 9% 18. 1% 1998 30. 0% -152. 1% 22. 1% 21. 2% 26. 5% 1999 30. 1% 126. 4% 21. 9% 15. 8% 40. 9% 1998 1999 32,088 3,175 29,178 16,004 13,174 1997 161,448 487 187,824 162,120 25,704 1998 85,788 238 109,022 89,839 19,183 22,682 25,772 (610) (362) 32,035 27,386 4,649 24,105 19,016 5,089 13 Prof. Florencio Lopez-de-Silanes Case: Samsung ElectronicsExhibit 5: Closing price of Samsung Electronic Shares and the Liner Trend of its Stock Price. Daily Closing Price of Samsung Electronics Shares September 1, 1996 to December 31, 1997 80,000. 0 Share Price in Korean Won 70,000. 0 60,000. 0 50,000. 0 40,000. 0 30,000. 0 20,000. 0 10,000. 0 1/1/97 2/1/97 3/1/97 4/1/97 5/1/97 6/1/97 7/1/97 8/1/97 10/1/96 11/1/96 12/1/96 9/1/97 10/1/97 11/1/97 12/1/97 Day Close Linear (Close) 14 Prof. Florencio Lopez-de-Silanes Case: Samsung Electronics Exhibit 6: Profile of Directors on the Samsung Electronics Board No.Name of Director 1 Kun-Hee Lee 2 Jong-Yong Yun 3 Hak-Soo Lee 4 Yoon-Woo Lee 5 Dae-Je Chin 6 Doh-Seok Choi 7 In-Joo Kim 8 Jing-Wan Kim 9 Sung Rai Choi 10 Soon-Taek Kim 11 Jin-Hoon Je 12 Joong-Koo Lee 13 Yang-Gyu Park 14 Hong-Sik Ko 15 Soo-Woong Park 16 Jae Yong Lee Designation Chairman & CEO, Samsung Electronics Vice Chairman & CEO, Samsung Electronics President & CEO, Group Reformation Headquarters, Samsung Electronics President & CEO, Device Solutions Netw ork, Samsung Electronics President & CEO, Digital Media Network, Samsung Electronics President & CFO, Samsung Electronics Executive VP, Group Reformation Headquarters, Samsung Electronics President & CEO, Samsung Heavy Industries President & CEO, Samsung Petrochemicals Vice President & CEO, Samsung SDI Company Ltd. Vice President & CEO, Samsung Factor Financing President & CEO, Samsung Techwin Company Ltd. President & CEO, Samsung Networks President & CEO, Samsung General Chemicals Company Ltd. Vice President & CEO, Samsung Fine Chemicals Ltd. Family Relation None None None None None None None None None None None None None None None 7 Ra-Hee Hong Lee 18 Soo-Bin Lee 19 Hyeon-Gon Kim 20 Chong-Yeul Pae 21 Kap-Hyun Lee 22 Suk-Soo Kim 23 Tetsuo Iwasaki Owns 25. 1% of the shares of Samsung Everland, which Son of Kun-Hee controls Samsung Life, the holding company of Lee Samsung Group Director General, Samsung Museums. Wife of Kun-Hee Lee Chairman & CEO, Samsung Life Insurance Company None Vice President & CEO, Samsung BP Chemicals Company Ltd. CEO, Samsung Corporation Advisor, Boston Consulting Group President Law Office of Suk-Soo Kim None None None None Chairman/CEO/President Applied Komatsu None Technology Note: The information provided in this exhibit is for illustrative purposes only. It does not reflect the real board structure at the Samsung Electronic Corporation. 15

Writing Compartive Essays

Writing Comparative Essays †¢ encouraging you to make connections between texts or ideas †¢ engage in critical thinking & go beyond mere description or summary to generate interesting analysis: – when you reflect on similarities & differences you gain a deeper understanding of the items you are comparing, their relationship to each other & what is most important about them. Although the assignment may say â€Å"compare,† the assumption is that you will consider both the similarities and differences; in other words, you will compare and contrast.Establishing a Basis of Comparison†¦ †¢ Objects must share some significant characteristics†¦.. (same class or general category) †¢ no basis of comparison if there is no common element †¢ If the similarities & differences between the objects are all simply obvious the reader of the essay is certain to be bored†¦. So the basis of comparison should go beyond the obvious†¦ When 2 subjects are very similar, it is the contrast that may be worth developing more When 2 subjects are not very much alike, you may find their similarities enlightening. Bees and People = absurd †¦. iffer in species, physical structure, intelligence both are: – social animals that live in complex social structures, – have tasks to perform & roles to fulfill in their respective societies = so we could write but focus on the common elements that seem most provocative = social structures & roles Bees and Jeeps Human Beings and Golf Tees = NO few points of comparison = very trivial ones bees & jeeps = travel great distances = dumb similarity people & tees = needed to play golf = dumb similarity = no significant basis of comparison = NO C&C essay YOU CANNOT WRITE A C&C ESSAY IF THERE ARE NO SIMILARITIES †¦. verything on the planet has differences so the aim here is to find similarities and then develop differences†¦. Points of Comparison (& contrast) †¢ treat the s ame, or at least similar, elements for each subject: Novel A Major characters Minor characters Themes Novel B Major characters Minor characters Themes NOT Novel A Major characters Minor characters Themes Novel B Minor characters Language Plot Deciding Your Purpose†¦. C&C solar & wind energy ask yourself†¦Ã¢â‚¬ ¦ Why do I want to C&C these objects. Do you want to inform, to emphasize, to explain, to evaluate, to persuade that one side is better than the other?Do you have more than one purpose? Your purpose will influence the content & organization of your comparison & contrast essay Comparative Essays may be: persuasive or informative (your thesis statement signals this purpose) Your assignment for this class = Informative C&C essay C&C solar & wind energy TO INFORM TO PERSUADE Provide information about both in order to determine whether one is better than the other as a practical means of producing significant amounts of energy†¦. Proving that one technology is superi or to the otherProvide information about both in order to determine that both are a practical means of producing significant amounts of energy†¦. Formulating a Thesis Statement†¦ †¢ identify the subjects to be C & C †¢ Indicate comparison as well as contrast †¢ indicate whether you will concentrate on similarities or differences or whether you will balance the two †¢ list the main points of comparison or contrast in the order in which they will be discussed in the essay (essay map) Despite the fact that television and radio are distinctly different media, they use similar strategies to appeal to their audiences. o essay map = ? TS = for an informative C&C = no stance = no taking a side underlined part = signals contrast italicized part = signals comparison focus / emphasis is on — comparison = as it is stated at the end of the thesis Although Melville’s ‘Moby Dick’ & London’s ‘The Sea Wolf’ are both about t he sea, minor characters, major characters, and themes of Moby Dick establish its greater complexity. TS = for an argumentative C&C essay = stance underlined part = signals comparison italicized part = signals contrast = focus of the essayCompare and contrast the reasons why the North and South fought the Civil War. The North and South fought the Civil War for many reasons, some of which were the same and some different. While both sides fought the Civil War over the issue of slavery, the North fought for moral reasons while the South fought to preserve its own institutions. While both Northerners and Southerners believed they fought against tyranny and oppression, Northerners focused on the oppression of slaves while Southerners defended their own right to self-government.While Callaghan’s â€Å"All the Years of Her Life† and Mistry’s â€Å"Of White Hairs and Cricket† both follow the conventions of the coming-of-age narrative, Callaghan’s story ad heres more closely to these conventions by allowing its central protagonist to mature. In Mistry’s story, by contrast, no real growth occurs. †¢ ThS = differences outweigh similarities – essay focus = differences Although Darwin and Lamarck came to different conclusions about whether acquired traits can be inherited, they shared the key distinction of recognizing that species evolve over time. ThS = similarities outweigh differences – essay focus = similarities †¢ No essay map = ? †¢ The focus of the essay = later half of the ThS †¢ Provide a detailed essay map in the later half of your thesis statement NOT in the first half †¢ Thesis for an informative C&C = no stance †¢ Thesis for an argumentative C&C = stance You need to focus the topics given to you – this focus should be evident in your Introduction and then later developed in your Thesis Statement.C & C solar & wind energy = TS = no essay map for both but notice that on e takes a side and the other does not. TO INFORM Solar energy & wind energy both, are practical alternatives to conventional energy sources, though they have their own unique characteristics & uses. TO PERSUADE While both solar and wind energy are practical technologies, solar energy now seems the better investment. Whether your paper focuses primarily on difference or similarity, you need to make the relationship between A and B clear in your thesis.Structuring the Essay†¦. Subject-by-Subject = purpose is to emphasize overall similarities or difference †¢ Say everything you have to say about the first subject, then move on & make all the points you want to make about the second subject and so on. †¢ In discussing each subject, you use the same basis of comparison & arrange these points in the same logical order. Appropriate for: short, uncomplicated papers. .. simple comparison†¦. points of comparison are general & few in number. †¢ Seems like 2 separate es says are weakly connectedPoint-by-Point = purpose is to emphasize individual points of similarity or difference. †¢ make a point about one subject & then follow it with a comparable point about the other Appropriate for: longer more complicated essays in which you discuss many different points. readers can easily follow your points. Nevertheless†¦.. it is easy to fall into a monotonous, back-and-forth movement between points †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. use clear transitions & vary sentence structure as you move from point to point. †¢ Each similarity for A & B can usually be handled in one paragraph in the body of the essay. Each difference for A & B may not be handled in one paragraph – try to split each point of contrast into 2 paragraphs even when using the point-by-point format†¦ (do remember to link the two paragraphs with a transitional sentence) †¦Ã¢â‚¬ ¦.. remember the stress is NOT on the number of points that u mention BUT on the DEPTH OF DEVELOPMENT Analogy†¦. When a subject is unobservable, complex or abstract – when it is so generally unfamiliar that readers may have trouble understanding it – analogy can be most effective. An analogy: – Looks for similarities & differences between 2 essentially dissimilar things. Compares the difficult/abstract/unfamiliar to the more familiar Think of the human genome as the ingredients list for a massive Thanksgiving dinner. Scientists long have had a general understanding of how the feast is cooked. They knew where the ovens were. Now, they also have a list of every ingredient. Yet much remains to be discovered. In most cases, no one knows exactly which ingredients are necessary for making, for example, the pumpkin pie as opposed to the cornbread. Indeed, many, if not most, of the recipes that use the genomic ingredients are missing, and there’s little nderstanding that why small variations in the quality of the ingredients can â⠂¬Å"cook up† diseases in one person but not in another. (another e. g. on pg 166) True Comparison Analogy analyzes items that belong to the same class – types of engines. Purpose = seeks to illuminate specific features of both subjects e. g. pairs things from different classes – with nothing in common except through the imagination of the writer Purpose = to clarify the one subject that is complex or unfamiliar craft of fiction writing —- craft of carpentry †¦ analogy helps the reader visualize an abstract or unobservable thing

Marketing Outrageously Essay

The author discusses how in the early 1980s the Portland Trail Blazers tried to move their radio broadcasting of games â€Å"in-house. † While doing this they sought out a fast food chain to sell its radio commercials to. McDonald’s, Burger King and Wendy’s all declined so they decided to go for a more local chain? Burgerville. The partner ship turned to be quite profitable for both as the â€Å"Blazer Meal† was a big hit for Burgerville and it allowed them to build more stores. The Trail Blazers made $900,000 with the business adventure. He goes on to talk about how AOL used an outrageous marketing strategy of sending out 250 million AOL computer disks into homes across America with a free month trial of the online service. The disks were given away everywhere and at all kinds of places. This shot them into the number one slot without CompuServe and Prodigy being able to realize it. He noted that before they took such a risk they tested their product in a smaller group of people before taking it to the extreme level they did. When he was in New Jersey with the Nets he tried the fast food sponsorship market again but with White Castle after being told McDonald’s would never associate themselves with the Nets. A few years past by and McDonald’s came calling about getting the same deal that White Castle had and the author told them they would have to wait and be the option if White Castle chose not to renew the promotion. The same also worked when he took the idea with him to Sacramento working as a consultant for the Kings. He just told the regional advisor in Sacramento to call the one in New Jersey and ask him about the promotion working. Chapter 7: Horse of Opportunity Ground rule #7: When a rare big opportunity comes along and you can’t test it, fly without a net. The author talks about the big risk that GardenBurger took. They decided to air just one thirty second commercial during the Seinfeld finale. The â€Å"Big Bang† sent out waves to the vegetarian population and led to GardenBurger increasing monthly sales by 411 percent along with many other increases in a 3 month span. The idea that was considered to be foolish paid off for the upstart company. Chapter 8: New as a Way of Life Ground rule #8: Take and experiment and make it part of your life. Do it again. The author brings up how the reading of the book Veeck as in Wreck by Bill Veeck is always a refreshing tool for his marketing ideas. He recalls one time when he re-read the book that he liked Veeck’s idea of the midget that he used to take an at bat during a baseball game. He decided to incorporate that into his basketball team the Buffalo Braves, but he chose to make the player a bit taller. Spoelstra went after the tallest man in the world who was nine feet three inches tall. The head coach at the time; Cotton Fitzsimmions loved the idea and was on board but would later find out that the man they were looking for had died. It was still a good way to be thinking in a way that others would not be. He talks about regular conversations with Kunitake Ando who is the president of Sony. Ando regularly talks about inventing new products even if they only last for a short time. From there the author goes on to talk about inventing new ways to market a product: A. It doesn’t take too much time B. It can work even better than the old ideas C. It is possible; there are always new ways you haven’t thought of yet He then gives other examples from movies and other industries that they use for their different ideas to expand to other areas of the market in outrageous ways that some companies would not consider using to market their movie or product.

A Study of why Gladiatorial Contests Took Place in Ancient Rome

A Study of why Gladiatorial Contests Took Place in Ancient Rome After the Carthage in 201 BC, the Roman Empire embarked through a dangerous time period where all gladiatorial fights were all the hype. The article â€Å"Murderous Games: Gladiatorial Contests in Ancient Rome† by Keith Hopkins, discusses the fights and how they were used for entertainment purpose; where war was considered â€Å"fun†. And at the time, Roman Empire consisted of 50 to 60 million people, which was one-fifth/one-sixth of the world’s population. The Roman Empire was a warrior state where animals and people were sacrificed. People of all backgrounds were sacrificed for funerals and for entertainment purposes. In this analysis, I will discuss their purpose, the animals involved, and Rome’s present ever since that time period. The purpose behind the gladiatorial fight was for pure entertainment. Rome was a cruel place where people were used for dangerous malpractices. At the time, Gladiatorial fights were acceptable in their eyes, but in today’s society, it is considered unethical. People worshipped the gladiators like they were pop-stars. They were famous and considered the greatest people in Rome; they were considered heroes to public. People also supported the gladiatorial fights due to fear, and if they objected against it, they were soon faced with the same dilemma as the gladiators, death. And when people went to the arena as the audience, and one time there was not enough criminals to be condemned to death, so instead they killed a crowd of people to the wild animals. The emperor was the one person that made the decisions. He made that decision because, sometimes, things did not go the way he would have liked them to. In many occasions, the audience would object and ask for favors, such as lowering their taxes, food, or an execution of a different person. But sometimes the people who were shouting were going to the consequences. During this time period, the emperor made the decisions and the people’s lives where in the hands of the emperor. Animals were also involved in this cruel activity that was a sport. A large amount of animals were used as entertainment and later put to die. Some of the many animals involved included elephants, ostriches, lions, and much more. Criminals, animals, and slaves, and other people were put inside the arenas to fight, and many of them did not survive; no one actually comes out alive. On a day there were 3,000 people who fought (included men and woman) and 5,000 animals that were killed in the arena. That shows how big the arena was, which also included more room for 50,000 people to watch. One of the biggest shows was the show made by the Emperor Trajan to celebrate his defeat against Dacia. The fight lasted throughout 123 days; with 9,138 gladiators fighting and 11,000 animals killed. The emperor then later started to introduce more animals; animals like crocodiles, rhinoceros, giraffes, and tigers. At one point, the amount of hippopotamuses started to decrease more and more until one was brought from Europe through a steamship from London. Wild animals seemed to have been decreasing over that time period due to the tremendous amount of fights. Rome has changed ever since those time periods, making it an important part of history. People of all backgrounds were killed- who were criminals, slaves, Christians, and even people from the crowds- and for the emperor’s entertainment. Rome was a cruel society where cruelty was a way of life. People died for the public’s selfish needs of entertainment. There were no laws against those actions that brought brutality into the lives of the Romans. Many people looked up to the people that did not show them the true meaning of being hero, and instead they looked up to gladiators who harmed others where many of them were innocent.

GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT Essay - 1

GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT - Essay Example Therefore, the total cost of the Model needs to be redefined. Carrying cost is constant; the model assumes that carrying costs are constant; however, this might vary depending on the quantity of inventory, economies of scale, increase in storage space, and renting of new warehouse. Independent orders; the increase of orders may increase the cost of saving by reducing the transportation and paperwork. This means that the original EOQ should be modified and developed to deal with the change. In essence, this means that the optimal strategy is computing one product Instantaneous delivery; the model assumes that the orders is delivered instantly; however, this can be modified to include the safe stock. In other words, the model assumes that there was no delay in delivery of stock and the delivered stock is as demanded. The model is based on assumptions hence not accurate; for instance, it assumes that there is a steady demand of the product for immediate restocking. However, the model does not consider variables such as economic fluctuations, as well as, seasonability of some products. Moreover, it assumes that holding charges, ordering costs, and inventory units are constant. This is difficult hence needs a constant monitoring of the inventory levels. In simple terms, the model is limited by the assumptions since the formula does not consider other factors and different products in the same order. Moreover, the model is based on complex mathematical calculations that require an individual to have a good understanding of algebra. This model disadvantages the small entrepreneurs who lack knowledge in calculating such figures. Notably, level production strategy is concerned with producing a plan that helps in maintaining a steady rate of employment and production. Satisfying demand requires that production in a firm be increased and lowered to

Accounting for Decision Making Essay Example | Topics and Well Written Essays - 1250 words

Accounting for Decision Making - Essay Example These two important measures of profitability show that the company has made remarkable progress over the nest quarter signifying increased efficiency and effectiveness. However, this is not the case. The statements prepared under the contribution margin rules show that the contribution margin has not improved between the two quarters. The statement prepared implied the company has contribution margin of 52% in the both the quarters, as seen in figure 5, implying that there has no increase in efficiency of controlling variable costs. Therefore, the profit net profit margin under the contribution margin statement remains 14% in both quarters. The increase in the net income under the absorption id due to the allocation of the fixed costs over a greater number of units produced. Mr. Rozen has increased the production levels from 25,000 units to 50,000 units. This has reduced the allocation of fixed costs from $24 in first quarter to $12 in second quarter. Thus the cost of goods sold has decreased by $300,000 which has increased the gross margins and the net margin. Can you make any suggestions for reporting in the future? Absorption approach is construc tive for external reporting. It does not provide the competitors with too much information which they can use to their advantage such as the product cost, the material costs, the labor costs and others. Similarly, this approach considers the costs to the finished inventory as an asset on a balance sheet until it is sold. Therefore, this helps the company to improve its metrics for external stakeholders. Likewise, the Generally Accepted Accounting Principles, or GAAP, requires the publicly held companies to prepare their statements under the absorption approach. (Taylor, 2010) However, for internal users and decision-making, contribution margin approach to income statement is quite useful. Variable costing allows the internal users to understand the product cost of unit which will allow them to decrease variances between actual and budgeted amounts. This helps in controlling costs and overall profitability of the company. With this approach, the managers can make better decisions in a fluctuation sales environment and helps them to accurate the cost of productions for future periods. Likewise, this approach helps to observe an impact of each and every product on the overall profitability of the company. Some products are better absorbers of fixed costs and increase the earnings of the company. Therefore, an adequate decision can be made regarding the discontinuation of product which will least affect the earnings. (Scott, 2012) Do you think Mr. Rosen should be seriously considered for the CEO position? Why or why not? Mr. Rozen has based his decision to increase the production on inadequate information. He has not pondered hard over the impact of his decision on the company’s operations and profitability. With the increase in production, Mr. Rozen only allowed for a better allocation of the fixed costs over a larger quantity of units. This only allowed for the costs to be temporarily seen as assts on the balance sheet in the form of inventory. However, M r. Rozen must understand that the huge amount of inventory that has been created will need to managed and properly maintained over the nest quarter for the sales in future. This will increase inventory handling costs and storage costs that will have

Contract Renewal and Non-Renewal Case Study Example | Topics and Well Written Essays - 250 words

Contract Renewal and Non-Renewal - Case Study Example In this case, the principal is equally responsible for doing his job that includes making a review on the success of the three contacts in place and come up with necessary recommendations. In reviewing domain 1, there is active and successful student participation and thus no reason for nonrenewal. However, the lack of evidence of improvement challenges the expectation for better performance. Since ethical violations and incompetence comes before the poor performance in deciding whether to renew a contract under TEA, I will recommend the board to vote on this contract to decide whether to renew it or not for the next school year. In reviewing domain 2, there is the adequate delivery of instruction as recommended by the TEA and subsequent level of improvement is present. I will, therefore, recommend for the renewal of this contract for the next school year with a hope that more improvement will follow. In reviewing domain 3, I find that adequate competence is in place as shown in prof essional development that results in moderate improvement. As a result, I would recommend for the renewal of the contract for the next school year as their no reason for nonrenewal. Indeed, domain 3 satisfies the terms and expectations of the TEA.