Why Strategy Matters?

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

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

3. CLASSIC COKE vs. NEW COKE vs.

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

5. STARBUCKS SYNDROME

6. The VCR Battle (VHS vs. Betamax) SONY: Betamax, 1974 Panasonic: VHS, 1976 ≪ 95% of the VCR market, 1988 SONY: The biggest loser of standards war?

7. UP-SELL & CROSS-SELL

8. QWERTY TYPEWRITER

9. 1800s Underwood TYPEWRITER

10. IT Management Case1 : AsianaAirlines (1/6)

11. 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 Solution RFID-enabled air baggage tracking and control system IT Management Case1 : Asiana Airlines (2/6) • Tracking and managing passengers’ baggage has always been important to successful airlines But

12. IT Management Case1 : Asiana Airlines (3/6) • RFID? • RFID Radio Frequency Identification • Automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders Character • 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

13. 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 correspondingbaggage sorting area • Sort pieces of baggage according to theirdestination and flight number • Load baggage onto the aircraft IT Management Case1 : Asiana Airlines (4/6) • Position of using RFID Baggage sorting and loading system Check-in counter Security check point Baggage handling system

14. 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 • Check and send “passenger on-board informationto the transportation system • RFID tags carried by passengers are distributed IT Management Case1 : Asiana Airlines (5/6) • Position of using RFID (Cont’d) Boarding gate reader Cross-pickup check Baggage reconciliation system Carousel

15. IT Management Case1 : Asiana Airlines (6/6) • Results • 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

16. IT Management Case2 : Shinhan Bank (1/5)

17. IT Management Case2 : Shinhan Bank (2/5) • Characteristics of Financial Product Intangibility Inseparability Geographical Dispersion Financial Product Individual Marketing System Balancing Growth with Risk Lack of Special Identity (Source: Arthur Median)

18. IT Management Case2 : Shinhan Bank (3/5) • Shinhan Bank’s CRM • SRMS(Shinhan Relationship Management System) • introduced in early 2000 SRMS Catching Symptom of Customer Secession Scheduling for Salespeople Customized Portfolio

19. CustomerInformation Campaign Information Visualized Answer tool Visualized Campaign Design tool Visualized Campaign Evaluating tool IT Management Case2 : Shinhan Bank (4/5) • Structure of SRMS Middle Office System Front Office System Back-end Office System Data Mining System Branch Mining DB Data Collecting and Auditing Call Center Internal Data CRM DB Internet Banking& Tele-Banking External Data Customers Analysis CRM Mart OLAP System CD / ATM Sampling Transformation Transmission CampaignManagementSystem DMI Tele-marketer

20. IT Management Case2 : Shinhan Bank (5/5) • Results Results of Shinhan’s CRM Net profit of Shinhan Bank • Staff can focus their original task 457 billion won • Target marketing is available 347 billion won • United customer managing is available • United performance of evaluation is available • Establishing strategy in customer’s view is available (Source: http://www.shinhanbank.com) (Source: 성공적인 CRM 추진전략과 구축 방안에 관한 연구)

21. IT Management Case3 : Namyang Daily (1/4)

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 IT Management Case3 : Namyang Daily (2/4) • Processed milk : a milk that is processed to add some taste or fragrance

23. IT Management Case3 : Namyang Daily (3/4) • Namyang’s Strategic Choice White Milk Functional/ProcessedMilk Stable market Low production costs Well-being trend Higher profits Advantage Strong competitors Lower profitsandCustomer’s needs High elasticity of demand High production and development costs Disadvantage Namyang focused on white milk All the main competitors focused on Functional & Processed milk Strategic Choice GT Technology!!!

24. IT Management Case3 : Namyang Daily (4/4) • Results Results Success Factor • 100 million packs sold in 100 days after Launching • The most sold milk in a day (1million packs a day) • Change the Basis of Competition • Differentiate from other white milk through its “tastes” (Breaking the fixed idea that “White milk is not delicious”) Market Share in Milk Business Sales Volume Compared with other Hit Product 맛있는 우유 GT Other milk brand (Source: 2004.10.17 –제일경제)