At the beginning of 2015 a group of senior executives in Samsung Electronics’ TV manufacturing division, which is No. 1 in market share with more than 20% of global sales, held a meeting attended by Jay Y. Lee. The vice chairman, as he is typically referred to by Samsung’s more formal officials, made some mildly critical comments about the division’s marketing efforts, according to a version of the meeting that has made the rounds of Samsung’s top managers. Thirty-year veteran Park Gwang-gi, an executive vice president and the unit’s head of strategic marketing, was said to be so rattled by Lee’s criticism that he immediately resigned his position.
The anecdote is notable because it helps illustrate the power that Samsung’s founding family wields despite the complicated chain of ownership and command inside the conglomerate. For starters, operating authority resides in individual business units, not headquarters. What’s more, the Lee family holds a relatively small stake in Samsung Electronics and even smaller positions in other Samsung affiliates. Further confusing things, it can be a challenge to define just what Samsung is—or isn’t. Consider a disclaimer Samsung posts on a corporate website: “Each company within the Samsung Group is an independent legal entity. Samsung Group is not a legal entity. Samsung Group is a term to conveniently refer to a group of companies that are tied together by their corporate history.”
That corporate history dates back some eight decades, to when Jay Y. Lee’s grandfather, Lee Byung-chul, started a food trading business in 1938. Today the chaebol comprises 67 distinct businesses whose product lines range from apparel and amusement parks to shipbuilding, washing machines, and financial services. Because of its market-leading positions in three massive industries—smartphones, memory chips, and TVs—Samsung Electronics is by far the most important part of the conglomerate, accounting for two-thirds of group revenues and an even greater portion of its profits.