Samsung Annual Report 2003 THE NEXT PHASE THE NEXT PHASE Samsung Annual Report 2003 THE NEXT PHASE MOTIVATION To understand where we’re going, it helps to take a look at what’s driving us there. 9 COLLABORATION Successful companies no longer always go it alone. 23 EXPECTATION Customers are all about expectations. 35 DEMONSTRATION It is important to demonstrate that our standards, values and goals are indeed real. 44 COMPUTATION 61 All Samsung products and services mentioned in this publication are the property of Samsung. ORGANIZATION Published by Samsung in coordination with Cheil Communications Inc. The power of Samsung as a brand is tied Printed by Samsung Moonwha Printing Co., Seoul, Korea to the strength of its organizations. Written by Denis Jakuc 65 Principal Photography by Ashton Worthington Created by The Corporate Agenda: www.corporateagenda.com TEN YEARS AGO, Samsung launched its New Management initiative, with the ultimate goal of becoming one of the world’s premier companies. 1993 June Samsung adopts New Management initiative 1994 1995 1996 February January January January July Chairman Kun-Hee Lee holds Japanese headquarters opens Samsung opens headquarters Samsung Electronics begins Samsung Everland opens Carribean electronics products comparison in USA, Europe and China mass production of 64Mb DRAMs Bay, world’s first indoor and outdoor and evaluation conference July water park in Los Angeles, California, USA Samsung Corporation is the February March first Korean company to reach Samsung Electronics completes Samsung Electronics completes Chairman Kun-Hee Lee is March $10 billion in exports TFT-LCD manufacturing lines construction of manufacturing appointed a member of the Second phase of Second complex in Tijuana, Mexico International Olympic Committee Foundation campaign August April introduces new unified corporate Samsung Electronics becomes Samsung Corning Precision November identity program world’s first developer of 256Mb Glass is established Samsung Electronics develops DRAM chip world’s first 1Gb DRAMs August June Samsung Global Environment September Samsung Hall of Fame is opened Ho-Am Foundation is established Research Center is opened Samsung Electronics completes color television factory October November in Tianjin, China Samsung Press Foundation Samsung Electronics is established independently develops ultra-light October 100g mobile phone (SH-700) Samsung Community Service Samsung Internet homepage Team is founded is launched SINCE THEN, we’ve worked hard to change our thinking, our processes and our strategies, all while keeping an eye on achieving our goal. 1997 1998 1999 2000 February June February January January The largest manufacturing complex Samsung Electronics enters Chinese Samsung Electronics develops samples Samsung General Store building, Chairman Kun-Hee Lee is conferred in Southeast Asia, in Seremban, CDMA market (agrees to provide trial of world’s first 128Mb SDRAM the birthplace of Samsung, is restored an honorary doctoral degree Malaysia, is completed broadband CDMA WLL network with from Seoul National University China United Telecom) March May April Samsung publishes Samsung Group Samsung Foundation of Culture March Small Business Training Center September Timeline & History book to celebrate opens Rodin Gallery Samsung Cancer Research is opened Samsung Global Strategy Group its 60th anniversary Institute in Seoul National University is founded June College of Medicine is completed May Samsung Electronics begins full-scale Samsung Electronics commercializes Samsung Electronics signs up as operation of new semiconductor world’s first 1Gb DRAM Samsung begins collaboration Worldwide Olympic Partner in factories in Austin, Texas, USA with Chosun Computer Center the wireless communications equip- September of North Korea ment category April Samsung Electronics’ Kiheung complex Samsung Electronics produces enters Guinness Book of World Records world’s first 256Mb DRAM as world’s safest workplace July October Samsung Electronics develops Samsung Venture Investment Corp. world’s first 128Mb SDRAM is established TODAY, Samsung stands ready to take its place among the top-tier global brands. 2001 2002 April January August February September Samsung SDI produces world’s Samsung Electronics achieves Samsung Electronics develops Samsung Electronics opens The Samsung Lee Kun-Hee first 63-inch plasma display cellular phone production volume world’s largest 40-inch TFT-LCD Samsung pavilion Olympic Scholarship Foundation is established of 50 million handsets Rendezvous @ Samsung for the July October Salt Lake Winter Olympic Games November South-North Unification February Samsung Electronics begins Cheil Industries develops Table Tennis Games is held Samsung Electronics is the mass production of 300mm wafer May world’s first fabric with first Korean company given Samsung issues a new universal 170 yarn count November an award by ISS (Institutional November identification card to all Samsung Samsung Electronics achieves Shareholder Service) Cheil Industries develops employees The first Samsung Fellowship color TV production volume of Lansmere 210, the premium is awarded 100 million sets April fabric with a yarn count of 150 Samsung Electronics enters December China’s CDMA market Samsung Electronics is awarded Samsung records its largest “20 Billion Dollar Export Tower” profit ever – KRW 8.3 trillion May Samsung Life Public Welfare Foundation opens Noble County Retirement Community June Samsung Everland sets record of 100 million visitors THE NEXT PHASE 5 A MESSAGE from THE CHAIRMAN Kun-Hee Lee Samsung is now crossing the threshold from aspiration to attainment. Each and every day, we are committed to expressing – in all our products, services and activities – why we should be recognized as one of the world’s premier companies. We will demonstrate these top-level qualities to everyone whose lives we touch – to our customers, partners, co-workers, shareholders and, most importantly, to the people in our communities. As we enter this final phase in our journey to becoming a top global competitor, we must be aware of developments in the world business environment. Europe’s economic integration continues to expand, and the North American Free Trade Agreement is creating another growing economic bloc. As trade barriers disappear, the world is evolving into one massive economic entity. In business, the rule of “survival of the fittest” will be played out on a global stage: the world’s top companies will flourish and grow, while second- and third-tier players will fall behind. A Year of Impressive Accomplishments In 2003, Samsung performed as a strong and steady pillar of the Korean economy and is poised for the future. Thanks to the commitment and enthusiasm of our em- ployees, we increased both overall exports and the number of product categories in which we rank first in world market share. In our listed companies, we consistently increased shareholder value across the board. Equally important, a leading brand consultant rated Samsung the world’s fastest-growing brand for the second year in a row, assigning us a total brand value over $10 billion. This year, we begin the Next Phase by focusing on our core strengths – innovation and quality. In every product area, from our largest drill ships to our tiniest flash memory chips, we will continue to give customers value and services that exceed 7 their expectations. Above all, we will deliver a level of quality no other brand can surpass. With this kind of success as background, we must not be tempted to become complacent. We need to persevere, to stay focused on the long term, to pay attention to the smallest details and to avoid being overconfident. These are the key qualities that have brought us to where we are today. Delivering Success The Next Phase will see Samsung concentrating its resources on global leadership. Our key efforts center on improving our knowledge, our brands and our design capabilities. We are raising the added value our businesses provide to customers and increasing the number of our world market-leading products. We can become the top brand in regional markets by being best at responding to local needs. Samsung is also at the forefront in the development of next-generation technologies. Our long-term vision is digital convergence, and in this arena we’re firmly com- mitted to taking a leading role. TVs, DVDs, CDs, MP3s, PDAs and PCs can be efficiently connected and controlled in the home through cellular phones. Even home appliances can be integrated into digital data networks. All that is needed is greater audio, data and imaging connectivity – and these three areas are among our core strengths. A significant part of our technological leadership will be based in providing top-quality employee training, so that the highest level of technical support can be provided for these advanced products. Partnerships and alliances are also key to our success. Companies we compete with in one area can work with us in other areas to our mutual benefit. We believe that in markets driven by common standards, alliances are an important way to spur consumer acceptance and overall success. A Commitment to the Global Community Samsung has a corporate responsibility to society, and we must demonstrate in all ways that we are a company that truly cares about people. In our local communities, we will continue to lend our hands and hearts to those in need. In all countries and in the world at large, our goal is to set the example of what it means to be a good corporate citizen. 8 As a company, we are learning that we can remain vital only as long as we pursue our goal of becoming one of the world’s most admired brands. This pursuit creates unmatched opportunities for our employees to fulfill their own personal visions and ambitions as well. The forces driving Samsung to become a top global brand are already in place: the people, processes, partners and products. We will let nothing stand in the way of our willingness to take on new challenges. Let us bring together our passion and our capabilities, and let us exhibit a spirit of creativity, challenge and cooperation as we stride confidently into the Next Phase.