Asia Forum Luncheon Series From Land of Morning Calm To Dynamic Korea

1. Asia Forum Luncheon SeriesFrom Land of Morning Calm To Dynamic Korea Presented 11-03-2010 Paul Hong, Ph.D. CMA Kihyun Park, MA, ABD Sunhee Youn, Ph.D. MaGa (Mark) Yang, MBA, ABD Information Operations and Technology Management College of Business and Innovation University of Toledo, USA

2. Order of Presentation [1] Introduction [2] Korea: A Historical Perspective [3] Leading Industries for Global Businesses: (a) Steel and Shipbuilding Industries (b) Automobile and Mobile Industries [4] Challenges and Prospects

3. [1] Introduction

6. Korea

7. Major Trading Partners of USA

8. [2] Korea: A Historical Perspective

9. After Korean War (1950-1960)

10. Economic Growth Factors in Korea • Political leadership: President Park Chung-hee • Korean people strong work ethic and high-level education • Manufacturing and infrastructure • Business entrepreneurship

11. Table 1: Historical trends of Korean industries 11

12. Population (Korea)

13. Gross Domestic Product (Korea) (in US dollars)

14. The number of Worker in Korean Industries Manufacturing Wholesale and Retail Trade Construction

15. Table 2: Global Fortune 500 Korean manufacturing and service firms 15

16. Table 2: Global Fortune 500 Korean manufacturing and service firms 16

17. (A) Steel & Shipbuilding Industries (B) Automotive & Mobile Industries - Hyundai Kia - Samsung & LG [3] Leading Industries for Global Businesses

18. Korean Steel Industry • Steel industry is vital in Korea because: • Foundational basis for Korea ‘s key manufacturing sectors (e.g., automobile, shipbuilding) • Growth engine for economic rapid expansion • Global large-scale in terms of production volume: • World’s sixth largest steel producer

19. Steel Industry – POSCO (Pohang Iron & Steel Company) • POSCO is #1 steel maker in Korea/ 2nd largest steel maker in the world • Cost Competitiveness • Global Supply Chain Network • Large-scale manufacturing capability • Premium Value • Product development capability • Green Initiatives • Invest $700 million for green businesses by 2018

20. Top Class Productivity Abundant and high-skilled workforce Strong shipbuilding know-how Economies of Scale Shipbuilding industry : 3 Excellences of Korean shipbuilders. 20

21. Shipbuilding industry : 3 Excellences of Korean shipbuilders. • 2. Well-Balanced Product Portfolio: • Diverse production development & commercialization (e.g., container ships, tankers, bulk carriers, etc.) 21

22. Shipbuilding industry : 3 Excellences of Korean shipbuilders. • Shipbuilding Cluster Effect: • Extended well-built infrastructure • Manufacturing supplier network • Supply chain network integration 22

23. Supply Chain Capabilities Performance Outcomes Information System Capacity Mutual Relational Quality Supply Chain Capacity Firm level Performance Customer Responsiveness Mutual Trust H5(+) H2(+) H7(+) Strategic Information System Planning Capacity Information Personnel System Capacity Supply Chain Flexibility H1(+) H9(- ) H4(+) Cost of goods sold Information Quality H3(+) H8(- ) H6(+) Research Model: Supply chain Information Capabilities and Performance Outcomes: Case of Korean Steel Suppliers

24. Korean Automotive Industry (1) Automobile is the climax of manufacturing. 20,000s of auto-parts/ value-added Requires complex manufacturing capability Only few countries can make its national/ global brand cars. (2) Continuous evolution from “Sibal” (1955) to “Genesis” (2009) (3) One of the leading automotive manufacturers in the world 5th largest (Production volume) 6th largest (Export volume) 24

25. (1) Strategic Leadership (Chung Mong-koo) Strategic leadership Hands-on leadership (2) Excellent QM & SCM IT Infrastructure capacity Supply Chain Network excellence (3) Aggressive R&D/ Marketing Brand awareness CNN Money: Kia, The Soul Collective (Excellent Marketing Campaign: 10-20-2009) Super Bowl Commercials since 2008 Hyundai Kia Success Factors 25

26. (1) Two dominant global electronics firms Korea surpassed world-best firms (e.g., Sony, Parasonic). Major business areas: Mobile devices, Electronics, Digital display, Home appliances, etc. (2) Brand value: Samsung -68th out of top global 100 firms (3) Huge/ Limitless Market potentials Income (GDP per capita) grows; then, people buy TV, mobile, home appliances Untapped markets in Developing countries Samsung & LG Electronics 26

27. Brand value of Samsung, 2010

28. Samsung mobile: Market share in the U.S. Samsung Smartphones’ Strength and Weakness • Excellent mftg capability (feature & design) • Weak in lasting software capability 28

29. Samsung: TV Market share world-wide Internet TV Wars: Yahoo and Samsung Step Up to Google and Sony 29

30. LG Display: World’s largest Plasma panel TV manufacturer • By 2005, LG became a Top 100 global brand. • LG Display, is now the world's largest plasma panel manufacturer. • Quality designs, innovative technology, and its integrated supply chain. • In 2008, sold > 2.5 mil plasma TVs around the world. 30

31. [4] Challenges and Prospects

32. China USA Europe Korea Japan What is Korea? A sandwiched nation!

33. China USA Europe Japan What is Korea? An opportunity nation! Korea

34. China China USA USA Europe Europe Korea Japan Japan Perspectives & Destiny Korea as the opportunity nation. Korea as the sandwiched nation Korea Motivating, Hopeful, and Proactive Restrictive, Defensive and Reactive

35. New Growth Engines: National Level Korea’s Core Products and Services Global and Sustainable Space industries Defense products Waternomics Natural Gas Dynamic and Smart High learning ability, Applied Integrative Technology Green Cars, DVD TV Combination Nuclear, Solar Energy Bio-pharmaceutical Total Value Scope and Size Selection and Focus Manufacturing Industries Semi-conductor, Automobile, Shipbuilding, TV 2010 2020 2030

36. Dynamic Korea!