1. Korean Management (1,2)
Corporate Strategy

2. A relatively small country with an area of approximately 100,000 km2
KOREA
A relatively small country with an area of approximately 100,000 km2
Fourth largest economy in Asia: GDP of more than US$ 1.4 trillion in 2016, with the population of approximately 50 million
Estimated per capita income level in 2016 was approximately US$ 27,540 and US$ 35,790 on a PPP adjusted base
Income level per capita has increased by approximately 250 times over the last 50 years
Manufacturing and construction sectors amounted to 39% of the total economy in 2016 (with 3% falling to agriculture and 58% to services)
Large companies are members of business groups (Chaebols) which dominate the export-oriented industries.
SMEs with less than 300 employees accounted for almost 87% of the country’s total business sector employment

4. Economic Development, Corporate Growth & Business–Government Relations
Before 1950s
Strongly influenced by Japan’s rule ( )
Split into a Southern half (under USA influence), Northern half (under Soviet influence)
Korean war ( ): Deprived of the autonomous achievements and leadership for the previous 50 years
1960s
(Chung-hee Park regime)
Authoritarian government, rapid economic development: concentration on specific sectors + preferential treatment from the government
=>Basic industry: cement, petroleum, light and labour intensive industries such as textiles and footwear
=> Heavy industries: steel and ship building (late 1960s)
=> advanced assembly industries: automobiles and electronics (1970s ~)
1970s
High growth: Double digit annual growth rate: Korea moved from a developing economy => an emerging economy
Numerous business groups (Chaebol) emerged. They expanded into numerous technologically unrelated industries as typically reflected by Lucky-Goldstar group
After 1980s
Moved into technologically advanced fields, i.e. semiconductors, cellular phones and digital displays
Financial crisis and structural reform: Chaebol’s limits, efforts for reforms and Improvements

5. Financial Crisis of 1997 & Structural Reforms
Asian financial crisis in 1997
Seeking financial assistance from IMF
Restrictions for international investors removed
Restructuring of Chaebols
Financially troubled firms were acquired by foreign firms
Business models were revised
The five leading Chaebols
Daewoo ceased to exist
Samsung, Hyundai, LG and SK survived, but restructured with improved corporate governance and disposal of unrelated businesses
Large business groups continue to play an important role in Korea

6. Korean Capitalism Chaebol
Japanese equivalent of pre-WWII “zaibatsu” – family controlled conglomerates
Many large corporations representing various industries
Complex web of cross-company ownership to maintain tight management control of their group companies
Follow the Japanese strategy paths

7. Korean Capitalism

8. Korean Capitalism

9. Korean Capitalism
(2017)

10. Korean Capitalism

11. Korean Capitalism

12. Korean Capitalism Challenges Unequal Distribution of Wealth
Family Feuds
Similar Minded Educated Management
Civil Rights Issue
Impeded Development of Small and Medium-Sized Businesses in South Korea

13. Korean Management Style
Korean Confucianism
Japanese Management
Well-structured corporate ranks
Managerial procedures
US Management
Competition
Performance Orientation

14. Korean Management Style
Leadership & Decision Making
No separation between ownership and decision making
Power is centralized at the top level
General and unspecific directions
Few open communications in the meetings, and vertical human ties
Policies tend to be aggressive and entrepreneurial
Risks of managerial errors and unfavorable changes

15. R&D Expenditures as Share of GDP for Selected Countries (2000 – 2015)
Finland
Source:

16. Let’s Take A Break!