Daewoo Case Summary

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Analysis of the Daewoo Group

Woo-Chong Kim founded the Daewoo Group in 1967. It became one of the Big Four chaebol in South Korea. Daewoo is an industrial and multi-faceted service conglomerate. Daewoo was prominent in expanding its global market through joint ventures all over the world. During the 1960s, after the downfall of the Syngman Rhee government, the new government intervened to promote growth and development in the country. They increased access to resources, promoted exports, financed industrialization, and provided protection from competition. In exchange for a company's loyalty, the government granted favorable treatment to the chaebol.
In the beginning, the Korean government instigated a series of five-year plans …show more content…

Those issues are as follows:
1. Government Interventions: Government policy served as a double edge sworn, it protected the chaebol, providing them with massive subsidies, unlimited cheap credit, and protection against foreign competition. However, the price for these services was total loyalty to the government. Chaebol were forced to take over industries against their will. The government was constantly involved in their businesses and stifled their creativity.
2. Labor Market: Traditional work ethics that helped Korea reach economic prosperity has been threatened as workers have begun increasingly violent protest against years of long hours and low pay. Daewoo shipbuilding suffered heavy loses due to workers demand for pay raises.
3. Operating in a Global Economy: International demands for free trade is forcing the Korean government to open its market. The chaebol will lose its protectionist import controls. Most recently, the North American Free Trade Agreement and the European Economic Community imposed trade …show more content…

Kim was most recently charged with allegedly paying campaign contributions to former president Roh Tae Woo government in exchange for a large government contract to build a submarine base.
SOLUTIONS:
Daewoo Group president was an excellent entrepreneur. He led the company's growth from an 18,000 initial capital value to $25 billion in annual sales. Some of the solutions he employed to counter problems identified in his company are as follows:
1. He used organizational politics to work with the government. He understood that to gain power, resources, and growth, he needed the protection of the government.
2. Daewoo Group was excellent at turning around faltering companies due to a well-managed, highly centralized organizational structure. Under Kim's vision, he developed a unique culture in his chaebol known as the Daewoo Spirit. This spirit consists of a commitment to creativity, challenge, and sacrifice. Kim believed in co-prosperity whereby the company provides value to employees, customers, suppliers, partners, and the country as a whole.
3. Daewoo enlarged its capital supply sources by diversifying its method of securing funds, including leasing and deferred payments. They raise funds successfully overseas for large foreign investment

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