Lee’s exit looks positive, hopefully the law will take its course
Interestingly, within nine days of the news of Lee’s resignation, the Samsung stock had already risen 5.34% higher (as on April 29, 2008). While quoting exclusively to B&E, Joongi Kim, Associate Dean, Office of International Affairs, South Korea, stated, “This reflects the perception that the fundamentals of the company remain sound and that changes do not affect the company itself.” But critically, rather than that, the stock increase could also be due to Samsung reporting a net profit of 2.19 trillion won ($2.2 billion) on April 25, 2008, a whopping rise of 37% from the previous year.
And now comes the bigger question: Can Samsung survive this sudden churn at the top, especially when there are no succession plans in place? More horrifyingly, the long term impact could be far greater for the whole of Korea, considering that the Samsung group firms account for a spectacular 20% of South Korea’s GDP. The group, which has over 250,000 employees, and annual revenues of $160 billion, comparable to even Singapore’s GDP! Noted author Richard L. Ptak, Managing Partner, Ptak, Noel & Associates; believes, “Executives at Samsung had enough advanced notice of these problems and time as well to put a transition plan in place to minimise immediate problems.” His colleague, Simon Forge adds, “The market may be hoping that Lee’s departure will mark the start of the end of cross-holdings between the various parts of Samsung, especially the main jewel, Samsung Electronics, so the business might be better run and shares will be owned by a wider range of shareholders.” Clearly, the exit seems positive; but with the background of so-called presidential pardons ever present, one wonders how transparently and speedily will the South Korean judiciary and government handle proceedings in this high profile case!
Interestingly, within nine days of the news of Lee’s resignation, the Samsung stock had already risen 5.34% higher (as on April 29, 2008). While quoting exclusively to B&E, Joongi Kim, Associate Dean, Office of International Affairs, South Korea, stated, “This reflects the perception that the fundamentals of the company remain sound and that changes do not affect the company itself.” But critically, rather than that, the stock increase could also be due to Samsung reporting a net profit of 2.19 trillion won ($2.2 billion) on April 25, 2008, a whopping rise of 37% from the previous year.
And now comes the bigger question: Can Samsung survive this sudden churn at the top, especially when there are no succession plans in place? More horrifyingly, the long term impact could be far greater for the whole of Korea, considering that the Samsung group firms account for a spectacular 20% of South Korea’s GDP. The group, which has over 250,000 employees, and annual revenues of $160 billion, comparable to even Singapore’s GDP! Noted author Richard L. Ptak, Managing Partner, Ptak, Noel & Associates; believes, “Executives at Samsung had enough advanced notice of these problems and time as well to put a transition plan in place to minimise immediate problems.” His colleague, Simon Forge adds, “The market may be hoping that Lee’s departure will mark the start of the end of cross-holdings between the various parts of Samsung, especially the main jewel, Samsung Electronics, so the business might be better run and shares will be owned by a wider range of shareholders.” Clearly, the exit seems positive; but with the background of so-called presidential pardons ever present, one wonders how transparently and speedily will the South Korean judiciary and government handle proceedings in this high profile case!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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