In 2001 the IT industries in the world were in a recession and world top companies were in a deficit storm, but Samsung Electronics(SEC) still could make huge income. The success factors of SEC includes leadership, company culture, recruiting, huge investment, e-business, and sports marketing, etc. This thesis tries to do case study about Samsung Group, one of the representative Jaebol(Korean big companies) of Korea, and the main objects of study are SEC and electronic-related subsidiary companies like SDI, SEM etc., to study Samsung Group¡¦s innovation strategy and R&D management. Firstly, this thesis divided the contents of SEC¡¦s Digital Convergence goal and strategy into B to B and B to C, and named as up-stream innovation and down-stream innovation respectively. As one of the main success factors of electronic industries is R&D, I empathize SEC¡¦s unusual technology learning or R&D strategy in the first part, that is R&D history of semiconductor, mobile phone, and TFT-LCD, and its R&D organization. Secondly is the so-called innovation strategy, and this thesis define it to be consisted of four main factors, that is domestic up-stream innovation, international down-stream innovation, domestic down-stream innovation, and international up-stream innovation, which is its innovation process. Finally, I analyzed SEC¡¦s financial ratio, to prove the above non-financial factors more specifically. As a result, Samsung invested huge money to R&D, which is needed for Digital Convergence product, like semiconductor, TFT-LCD, mobile phone etc, based on the vertical integration of group organization, growing to multinational company throughout the innovation strategy.

Lots of researches and reports analyzed the success of Samsung Electronics (SEC) mostly focusing on Samsung Group. This paper attempts to look into the relationship between SEC and Samsung Group in terms of SEC¡¦s capital management, and intends to find out if Samsung Group brings advantages to SEC. The analysis in this paper is divided into two parts: ¡]1¡^ examining the source and the use of SEC¡¦s capital by comparing with AUO and PSC¡F¡]2¡^scrutinizing SEC and the Group's financial performances. Firstly, from cash flow's point of view, AUO and PSC depend on substantial financing to meet their capital gap. Differences in working capital also cause impact on cash flow from operating activities. Same results are found similarly in analyzing the SEC and the Group. Moreover, regarding the purpose the capital, SEC evidently shows higher weights in cash outflows from investment activities than in property, plant and equipment. The difference mainly lies in the cross-investments between SEC and Samsung Group. On the other hand, based on the computation of financial ratios, SEC benefits from Samsung Group's integrated supply chains in comparison with AUO and PSC, especially in terms of account receivables and inventories. However, the same advantages are not shown in account payables conversely. It is inferred that SEC supports Samsung Group through giving looser credits. To sum up, as far as cash flows are concerned, SEC is capable of operating with sufficient working capital because of diversification and cross-investment within the Group. Meanwhile, SEC exhibits superior financial ratios than its peer companies as Group's cooperation. Subsequently, it is concluded that SEC gains much stronger competitive advantages from Samsung Group.