This paper looks at the article regarding strategic corporate transformation failures of two Korean firms Daewoo Group and Medison. This paper focuses on Daewoo Group only and summarizes the facts described in the article, and then bringing out the strategic significance of the story from a resource-based view. 1
Summary of the facts:
1.1 Company background:
Founded in 1967 as a textile trading house by a charismatic entrepreneur Kim Woo-Choong, the Daewoo Group rose to be the third largest of Korea's chaebols, ranked 24th in the Fortune Global 500 with total sales of over US$70 billion in 1998 (Dong-Jae Kim, 2007). Its failures came around the time when perhaps it was going for its greatest transformational change as it reached its peaks.
1.2 Strategic Transformation:
In 1997 Daewoo was rapidly expanding to international markets, and faced increased complexity in organizing and managing its activities worldwide, chairman Kim declared a massive strategic transformation to a decentralization model i.e from one big business group headquartered in Seoul, Korea to 10-15 smaller business groups in key country/markets with regional headquarters. (i.e. mini-Daewoos)
Resource-based view analysis of the Daewoo Group suggests that the weaknesses identified in the previous section will hamper the successful execution of this strategic transformation. The main problem is around leadership and organization culture. Until these issues are resolved this strategic transformation for the group can not be successful.
G Jhonson, K Scholes, R Whittington 2005, Entrepreneurial Finance 7th Edition, Prentice Hall
Dong-Jae Kim, 2007, Falls from Grace and Lessons from Failure: Daewoo and Medison, Retrieved Feb 08, 2007, from Factiva Research database
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