Why Strategy Matters? Euiho Suh POSMIT Lab. POSTECH Strategic Management of Information and Technology

Why strategy matters? 2 ■New Paradigm: –God helps those who have strategies, not those who just work hard without strategies! ■Old Paradigm: –God helps those who help themselves!

CLASSIC COKE vs. NEW COKE 3 vs.

ASIANA AIR vs. KOREAN AIR 4 We are young, too !

STARBUCKS SYNDROME 5

The VCR Battle (VHS vs. Betamax) 6 ≪ SONY: Betamax, 1974Panasonic: VHS, % of the VCR market, 1988 SONY: The biggest loser of standards war?

UP-SELL & CROSS-SELL 7

QWERTY TYPEWRITER 8

1800s Underwood TYPEWRITER 9

10 IT Management Case 1 : Asiana Airlines (1/6)

IT Management Case 1 : Asiana Airlines (2/6) 11 But Tracking and managing passengers’ baggage has always been important to successful airlines RFID-enabled air baggage tracking and control system Solution Use barcodes to implement a loss-free system Problem Whether the person picking up baggage at the destination matched with the barcode information of the baggage Higher likelihood of terrorist attacks

IT Management Case 1 : Asiana Airlines (3/6) ■RFID? 12 RFID Radio Frequency Identification Automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders No contact or line-of-sight required Short time to read the data of the tag Simple maintenance, no other cost to preserve unlikely barcode system Ability to read multiple tags simultaneously (faster, efficient) Information gathering can be 100% automated and in real time Character

IT Management Case 1 : Asiana Airlines (4/6) ■Position of using RFID 13 Check-in counterSecurity check pointBaggage handling system Baggage sorting and loading system Save baggage numbers to baggage tag’s barcode in the RFID tags Affix tags to the baggage Checked-in baggage is inspected Result are linked to passenger information in real time By using the tag information, Sent the baggage to the corresponding baggage sorting area Sort pieces of baggage according to their destination and flight number Load baggage onto the aircraft

IT Management Case 1 : Asiana Airlines (5/6) ■Position of using RFID (Cont’d) 14 Check and send “passenger on-board information to the transportation system RFID tags carried by passengers are distributed Carry out final checks Handle the baggage of any passenger not on board Reads the affixed RFID tag “Wrong destination baggage” check Check whether the baggage information matches the passenger tag information at exit Cross-pickup checkBoarding gate reader Baggage reconciliation system Carousel

■Results IT Management Case 1 : Asiana Airlines (6/6) 15 The development project was completed in April 2005 as scheduled The demonstration was carried out for about eight months, from May to December 2005 Results Tracking baggage in real time Preventing the miss-loading of baggage & baggage loss Preventing baggage cross-pickup Minimizing sorting errors by the baggage handling system Minimizing the time needed to match passengers and baggage Checking passenger information regarding dangerous baggage in real time Displaying information about arrived baggage to baggage handlers

IT Management Case 2 : Shinhan Bank (1/5) 16

IT Management Case 2 : Shinhan Bank (2/5) ■Characteristics of Financial Product 17 Financial Product Intangibility Inseparability Lack of Special Identity Geographical Dispersion Balancing Growth with Risk Individual Marketing System (Source: Arthur Median)

IT Management Case 2 : Shinhan Bank (3/5) ■Shinhan Bank’s CRM 18 SRMS(Shinhan Relationship Management System) introduced in early 2000 SRMS Catching Symptom of Customer Secession Scheduling for Salespeople Customized Portfolio

IT Management Case 2 : Shinhan Bank (4/5) ■Structure of SRMS 19 Back-end Office System Middle Office System Front Office System Data Collecting and Auditing Mining DB Analysis CRM Mart CRM DB Internal Data External Data Visualized Answer tool Visualized Campaign Evaluating tool Visualized Campaign Design tool Data Mining System OLAP System Campaign Management System Call Center Branch Internet Banking & Tele-Banking CD / ATM Tele- marketer DMI Customers Customer Information Campaign Information Sampling Transformation Transmission

IT Management Case 2 : Shinhan Bank (5/5) ■Results 20 (Source: (Source: 성공적인 CRM 추진전략과 구축 방안에 관한 연구 ) Net profit of Shinhan Bank Staff can focus their original task Target marketing is available United customer managing is available Results of Shinhan’s CRM United performance of evaluation is available Establishing strategy in customer’s view is available 347 billion won 457 billion won

IT Management Case 3 : Namyang Daily (1/4) 21

IT Management Case 3 : Namyang Daily (2/4) 22 ■White milk : a fresh milk that is not added any ingredients or taste ■Functional milk : a milk that is strengthened or removed specific ingredients ■Processed milk : a milk that is processed to add some taste or fragrance

■Namyang’s Strategic Choice IT Management Case 3 : Namyang Daily (3/4) 23 White Milk Stable market Low production costs Functional/Processed Milk Well-being trend Higher profits Advantage Disadvantage Strong competitors Lower profits and Customer’s needs High elasticity of demand High production and development costs All the main competitors focused on Functional & Processed milk Namyang focused on white milk Strategic Choice GT Technology!!!

■Results IT Management Case 3 : Namyang Daily (4/4) 24  100 million packs sold in 100 days after Launching  The most sold milk in a day (1million packs a day) Results  Change the Basis of Competition  Differentiate from other white milk through its “tastes” (Breaking the fixed idea that “White milk is not delicious”) Success Factor Market Share in Milk Business Sales Volume Compared with other Hit Product Other milk brand 맛있는 우유 GT (Source: – 제일경제 )