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Report: Samsung to focus on profits rather than growth

According to a report from Korea, Samsung may be planning to improve its profitability at the expense of expanding the company further.

Published onSeptember 10, 2015

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It’s no secret that Samsung has been having a tough time maintaining its previously strong profit levels over the past few quarters and it has caused many to speculate about how the electronics giant will pull itself out of this problem. According to an anonymous, but apparently high ranking source, Samsung is preparing to adjust its approach to focus on profitability rather than trying to grow its existing business any further.

This news suggests that Samsung may be looking to further cut costs to boost profits, if it no longer believes that it can expand its existing business much further. Some sources suggest that Samsung may examine its current staffing levels, but there’s no official indication as to exactly how or where the company will make such savings. At the beginning of the year, Samsung planned to reduce its marketing budget, but many expect that it will have to go further to boost its profit levels.

“The market growth in smartphones, televisions and home appliances, the current key revenue channels for Samsung, has flattened due to heated competition and widened consumer options. This situation is focing Samsung Electronics to cut expenditure in operations and other fixed costs,”

Samsung is apparently struggling with high costs as a result of its expansion over the past few years, such as a large increase in its wage bill. The company now employs some 320,000 staff, almost double its 180,000 headcount back in 2008. However, Samsung recently rebuffed reports that it was planning to reduce staff levels in Korea. Instead, the company is looking to relocate some managers.

“The Samsung Future Strategy Office has no plan to order group affiliates to cut their workforce,” – Lee Joon, Samsung chief communications officer

If the company is planning a business shift, Samsung will likely want to ensure than any changes to the company’s structure don’t affect its existing successful product lines. This rumor certainly doesn’t mean that Samsung won’t be continuing to invest in R&D and new product lines. Instead, the company may end up slowing down or abandoning some of its future expansions plans, to consolidate its focus on existing divisions and improving their profitability.

While smartphone and consumer electronics sales may be slowing, Samsung’s semiconductor business has been generating much needed additional revenue for the company. This could be key to Samsung’s future profitability.

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