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General Trading Company
Samsung C&T
Team 4
Suh, JinwonLee, jiwoong
Lee, junglokeChoi, myungwon
2010.03.04.Thu
22
AGENDA
I. General Trading Companies
II. Samsung C&T Analysis
III. Vision and Future Strategy
33
AGENDA
I. General Trading Companies
II. Samsung C&T Analysis
III. Vision and Future Strategy
44
Beginning of GTC
The government encouraged the formation of Korean GTC to fo-cus on exporting products.
• Early General Trading Companies were established in 1940’s in Japan (Mitsubish, Mitsui etc)
• In the beginning, GTCS mainly exported their family companies’ products and imported raw materials to manufacture them
Japan
Export ProductsFamily Companies
GTC
Foreign Companies
Foreign CustomersImport Materials
• In 1970’s, Korea Government encouraged establishment of GTC to promote exports
• Main function of Korean GTCs was exports, and they didn’t export only their family companies’ products, but also other companies’ products
Korea
Export ProductsFamily Companies GTC
Foreign Companies
Foreign CustomersImport Materials
Other Companies
55
Main Function of GTC
Finance, Overseas Investment, Information, Organizer, Converter are GTC’smain functions.
GeneralTrading
Company
• GTC buys products from companies and pays them cash before selling products.
• It can provide liquidity to customer companies.
Organizer
Information
Overseas Investment
Converter
Finance
• GTC can organize and lead consortium with various companies for huge projects
• GTC’s vast information and various experiences makes this possible.
• They can make advantageous deals by using information from their international network
• They build overseas factories and invest on foreign assets directly or for companies which don’t know about foreign market.
• They invest on small but promising companies
• They help small companies by importing, exporting, financing for small companies
66
Change of GTC’s BM
GTC is diversifying its business model, because conventional trading has become less profitable.
Business model of GTC
Past
Export ProductsFamily Companies GTC
Foreign Companies
Foreign CustomersImport ProductsOther Companies
Profit from trad-ing
Market Change
Manufacturers including family companies started to export directly.Conventional BM has been less profitable.
Now
TradingProject
Organizer
Invest onNatural
Resources
Invest & Help
Small Business
Financing
Business Diversification
77
AGENDA
I. General Trading Companies
II. Samsung C&T Analysis
III. Vision and Future Strategy
88
History of Samsung C&T
Samsung GTC has a long and illustrious history that represents the history of the import/export business of Korea.
Samsung GTC is formed as a legal entity as of 1952First focuses on the food and textile industry
Starts increasing its operations to heavy chemical industrySamsung focuses all its export activities to Samsung GTC
Strengthens its presence in the textile industryThe oil shock led to an even more aggressive market developing tacticsDevelops an import and resources development branch
1950
1960
1970
Despite overall weak economy, Samsung GTC grew an average 31.8% over 5 yearsFocused on electronics and heavy industry chemicalsStarted developing long term goals and networks
Samsung GTC merged with Samsung Construction to become Samsung C&TFocuses on high margin productsOverhauls portfolio to strengthen resource and project development
Reorganized to increase synergy between construction and tradingFocused on finance, marketing, IT, risk management, M&A, and distribution
1980
1990
2000
99
What Samsung C&T is doing
Samsung C&T’s business area covers diverse fields such as energy, industrial materials, natural resources. At first glance each unit seems unrelated to each other.
Samsung C&T
Energy &Environment
Bio energy
Power gener-ation
Plant
Industrial materials
Iron & Steel
Chemical
Electronic materials
Textile
Naturalresources
Oil / Gas
Coal / Mineral
Business Area Energy & Environment
Industrial materials
Natural resources
• Bio diesel palm plantation• Solar power plant• Transportation facilities
• Trading of stainless• Storing of chemicals• Trading materials for semiconductor• Investing on fashion companies
• LNG trading• Mineral resources development
1010
Function - Finance
Samsung C&T’s businesses can be divided by function into four sections; finance, investment, marketing and logistics.
Finance
Investment
Marketing
Logistics
Business process
Money lending
Manufacturing company
Large sizedcompany
Raw materialscompany
SamsungC&T
Cash
Raw materials
Cash
Product
Bond
Product
• Samsung C&T plays a role that prevents insolvency by paper profits of small sized company.
• They act as a clearinghouse that guarantees performance by providing cash against bonds.
1111
Function - Invest-ment
Finance
Investment
Marketing
Logistics
Business process
Money lending
SamsungC&T
Promising Company
Equity
Investment - money- Operation- Organizing
suitable companies
Samsung C&T invests in companies or business areas considered promising.
Construction company
Electroniccompany
Equipmentcompany
...
Suitable companies
1212
Function - Marketing
Finance
Investment
Marketing
Logistics
Business process
SamsungC&T
Manufacturingcompany
Right to
Sell overseas
Money
Samsung C&T buys the right to sell overseas from companies that lack an overseas sale network and utilize their own connections to provide access to foreign markets.
China
Unitedstates
Europe
...
Foreign Market
1313
Function - Logistics
Finance
Investment
Marketing
Logistics
Business process
SamsungC&T
Buyer in China
Products,Materials
Samsung C&T transports products, materials.
Seller in Japan
Money
Products,Materials
Money
• Very simple business process• Less than 5%
1414
Corporate Vision
Although Samsung C&T is currently doing well, it needs a new vision that will sustain profits.
2006 2007 2008 20090
2000
4000
6000
8000
10000
12000
14000
9498 9731
1181210876
275 282.6 364.1 280.5
Revenue Operating Profit
What vision does Samsung C&T need to drive growth in the future?
1515
Corporate Vision
The corporate vision embodies the reason for the existence of the firm given shape and direction by the taken strategy.
Vision
Corporate Objective
Corporate Strat-egy
Overall goal of organization
The “how to” achieve the objective
The shape of achieving the vision
Core Competency + Analysis of External Factors= Our Corporate Strategy
1616
Value Chain – Finding R&C
This value chain analyzes the activities of the trade business to capture the resources and capabilities of Samsung C&T.
Contract Outbound logistics
Afterservice
MA
RG
IN
MA
RG
IN
Product se-lection
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
• Marketing &Sales
• Search for suppliers
• Procure right to sell
Su
pp
ort
ing
Act
iviti
es
Prim
ary
Act
iviti
es
R&
C
• Network• Human Re-sources
• Accumulated trading experi-ence
• Trading experience• Financial power• Family of biz. “Samsung”• Biz. Alliance• Brand
• Logistics
• End-users & oversea compa-nies
1717
Value Chain – Finding R&C
MA
RG
IN
MA
RG
IN
Another value chain describes each stage in Samsung C&T’s recent renew-able energy project in Ontario that indicates other R&C.
Su
pp
ort
ing
Act
iviti
es
Prim
ary
Act
iviti
es
Organizing(consortium/partnership)
Bidding Construction OperationSearch
Firm Infrastructure
Human Resource Management
• Wind, so-lar panel cluster
• equip-ment
• Financing• Investing
Related par-ties:• suppli-
ers,• end-user
Technological Development
Procurement
• Network• Versatility• Human Re-source
• Project de-velopment
• Experience• Financial power
• Family of biz. “Samsung”
• Biz. alliance
• Brand• Accumulated experience
• Relationship with govern.
• Logistics• Equipment procurement
• Financial stability
R&
C
1818
V.R.I.O – Finding core compe-tency
The R&C of Samsung C&T is further developed into a core competency by the VRIO analysis
R&C Value Rarity Costly to Im-itate
Organization
Network O O O O
Versatility O X X O
Human Resource O O O O
Project Development O O O
Accumulated Experi-ence
O O O O
Financial Power O X X X
Family of business O O O O
Business Alliance O X O O
Brand O O O O
Relationship with gov. O X O O
Logistics (Triangle) O X X O
Equipment procurement O X X O
Financially Stable O X X O
1919
Core Competency - Network
Samsung C&T’s core competency include its powerful and wide network of global contacts.
Global Network (& Information)
93 offices in42 countries
DaewooInternational
50 offices in38 countries
SK networks72 offices in22 countries
Overview
2020
Core Competency – Human resource, Accumulated experience
Samsung’s human resources and accumulated experience also provides competitive advantage over rivals.
Accumulated ExperienceHuman Resource
Samsung’s special Future strategy group composed of foreign experts
• Established early in 1997• Preparing for Globalization• 200 foreign experts in Samsung who graduated from Top MBA schools
Ability-oriented system
• Samsung has strong merit system than any other companies.
• Competitive employees show great commitment to Samsung
Bought mining rights from Mexico of 73M barrels of oil
2008 JAN
World’s Largest Wind, Solar Panel Cluster in Ontario
2009 DEC
2010 FEB
First Asian company to construct So-lar Panel Plant in California
2121
Core Competency – Brand, Family of busi-nesses
Samsung’s core competency includes it’s powerful brand and the aggre-gate family of businesses.
Brand
http://www.interbrand.com/best_global_brands.aspx
SamsungC&T
Construction company
Electroniccompany
Equipmentcompany
Samsung does everything.Samsung ranks 19th in the world.
Family of Businesses
2222
External Factors Analysis
The external factors analysis indicates that GTC should find busi-ness opportunities in Environmental & Green energy.
Political Factor Economic Fac-tor
Social Fac-tor
Technology Factor
• Strong Environ-mental
Regulations
• Tension mounts be-tween US and China
• Global Recession
• Polarization
• Rise of BRICS economy
• An Aging Society
• Increasing awareness of the
Environment
• Well-being Trend
• CompetitionOn Developing Green energyTechnology
External factors change
ConventionalTrade business
• Influenced by Economy• Too much fluctua-
tions• Unstable
Environment&
Green Energy
Business
• High growth rate• Stable
Implications
2323
AGENDA
I. General Trading Companies
II. Samsung C&T Analysis
III. Vision and Future Strategy
2424
Internal analysis External analysis
Vision
The analysis of Samsung C&T shows its need to exploit business opportunities that can better utilize their core competency.
VISION
Samsung C&T’s core competence is its unique
infrastructure know-how
Trade Biz Less attractiveRed ocean
Network
Brand
Family of businesses
Accumulated experience
Human Resource
The push for alternative re-newable energy in developed countries
Low growth rate Not stable (affected by ex-change rate)
Direct exporting is increasing
Find new STAR business!
2525
Vision
By strengthening its core competence, Samsung C&T Corporation will strive to become the world’s best project developer.
New VISION
The World’s Best
Project Developer
VISION
‘Global Value
Creating Company’
Too Vague: - core competencies are not reflected on vision
Not Informative: - Vague on what busi-ness we are in.
actively en-gages in busi-ness of en-
ergy/environment.
provides opti-mal business
solutionsto customers
(in many forms)
Short- and mid- term
Long-term
2626
THANK YOU FOR LISTENING
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