Business strategy of Korean corp. 1 week 5

2 Comparative business management: EGSOP  clarify the relationship between business structure and their environments  explain the external environments & ownership - governance structure, strategy, and organization of corp.  external environments; social system(macro economics· political system), culture environments( languages, religions, customs), performance environments(business markets)  analyze the environments on 4 different axis; ownership & governance structure, strategy, and organization  To understand the change of mgt’ paradigm

3 – Governance: the differences of ownership-governance structure among corps. of different nationalities – Strategy: competitive strategy + business strategy + global strategy – Organization: innovation of human resource management + process innovation O rganization P erformance G overnance S trategy E nvironment Application of EGSOP model on Korean corp.

1. Definition of business strategy Strategy is to make decision about establishing long- term objectives and allocating resources to accomplish those objectives of company. - Alfred D. Chandler – (key words) : - long-term objectives - decision making of activities to achieve objectives - allocation of resources

Definition of business strategy(continued) To create & sustain competitive advantage: creation of value & profit (objectives of company) Allocation of resources of company: effective use of scarce resources of company Choice and release(waiver): decision making of strategic priority

2. multi-divisional structure & 3 level strategy 6 o effective organization for many product lines and broad market areas o Independent profit system: full responsibilities for business performance o CEO can concentrate on strategic decision making by delegating daily decision making to the chiefs of division. o Hard to find core competence in terms of long periods of time

3-level of strategy corporate strategy: Where to compete? - take place in CEO level - define overall corporate-level mission(objectives) - decide which industry it is going to participate - decide to deploy resources in to different divisions properly(equilibrium) - select new business to enter - throw up(give up); relinquish existing businesses. - decide the priority of business - raising funds

3-level of strategy business strategy: How to compete? - strategy to be limited to a particular business - decision making about concrete(detailed) action plan followed by corporate level strategy - deal with how the division can compete with competitors effectively in predetermined area of business - market segmentation - logistics channel - cost structure

3-level of strategy functional strategy: - take place in managers(directors) who in charge of business functions - main focus is to study short-term objectives and plans in operation(production) - directey related to activating plans which have already been made in business level - enhance the efficiency of production systems - decide the optimal level of inventory - enhance the service quality of customers

(1) corporate strategy Corporate strategy: decision making about which business area the company to participate specifically - diversification strategy: entry of new business(related or unrelated) - vertical integration & outsourcing strategy: cooperation with partners - overseas advance: globalization - strategic alignance, and M&A: insufficient competence on new investment alternatives

(2) business strategy business strategy: decision making about how to create and sustain competitive advantage in predetermined business areas how to compete with rivals? - analysis of competitors and competitive advantage - cost advantage and price competition - differentiation and differentiation competition

Generic strategy: M. Porter generic strategic means? - cost advantage: same products at low price - differentiation advantage: unique products at premium price - market niche market concentration 조직관리와 리더십 12

13 3. Framework of analysis of competiveness (concept)  analysis for obtaining competiveness related with business activities  competitive corp. is to produce products and services with better quality and at lower cost than rival corps. M. Porter  Value chain analysis of M. Porter  analysis for obtaining competiveness related with business activities  competitive corp. is to produce products and services with better quality and at lower cost than rival corps. M. Porter  Value chain analysis of M. Porter  industry competitiveness by analysis of increasing competiveness through specifying national key industry and change of industry structure M. Porter  Industry analysis of M. Porter  industry competitiveness by analysis of increasing competiveness through specifying national key industry and change of industry structure M. Porter  Industry analysis of M. Porter  analysis for enhancing efficiency of business activities through industry policy and change of external environment  national level which can maintain or enhance the national real income, and produce products & services to meet competitive condition of foreign countries M. Porter  Diamond model of M. Porter  analysis for enhancing efficiency of business activities through industry policy and change of external environment  national level which can maintain or enhance the national real income, and produce products & services to meet competitive condition of foreign countries M. Porter  Diamond model of M. Porter Industry competiveness National competiveness Corp. competiveness competiveness National competiv eness Corp. competiveness Industry competiveness

14 value chain analysis Primary Activities Support Activities Firm infrastructure (e.g., Finance, Planning) Human resource management Technology development Procurement Inbound logistics OperationsOutbound logistics Marketing and sales After-sale service

15 Porter’s Five Forces Model

16 The Competitive Advantage of Nations

17 Analysis framework of competiveness Nationalcompetiveness  The Competitive Advantage of Nations, 1990, M. Porter  government policy and analysis of industry environment  obtaining industry competiveness  possibility of wealth creation: infra, human resources, science tech., business efficiency Industry competiveness competiveness Corp.competiveness  profitability above a certain level  obtaining sustaining growth  superior market power  competence to obtain superior profitability over rival’s competiveness competiveness