Daewoo Group and Financial Business Essay -- GCSE Business Marketing C

Daewoo Group and Financial Business Problem Definition Daewoo group started as a small textile company and in just 20 years developed into second largest Korean chaebol ( family owned conglomerate). It had over 250000 employers worldwide, over 30 domestic companies and 300 overseas subsidiaries, generating sales of more than 100 billion dollars annually. However, in 1999 it seemed that the ‘golden days’ of Daewoo were over as it was faced with over 50 billion dollars dept and had to decide to sell some of its business to carry on. Can Daewoo really survive and if yes, how? The roots of Daewoo’s crisis are in: a) Korean Economic System’s Structure, Chaebols and Asian Crisis b) Daewoo corporate structure, Kim Woo-Choong and his policies The main problem is that Korean economic system is ready for change and already changing, so does the government and its policies. However, the chaebols such as Daewoo are living in the past and find it difficult to adapt to changes. The question is whether there is any place in a changing Korea for chaebols at all or they will be soon replaced by smaller but more efficient companies? Problem Justification Korean Economic System, Chaebols and Asian crisis: South Korea’s mad rush economic growth was initiated by late dictator Park Chung-hee in the early 1970. Park saw export growth as the key for economic growth. He provided cheap loans and tax benefits to nurture Daewoo and other Korean business into conglomerates that mass produced for export markets( http://detnews.com/2001/ autos). Most of Chaebols were family owned and all of this families were connected to the government which would give them lots of support and get their loyalty. As a trouble would appear ,as in example of Daewoo problem in the 1980s when Daewoo shipbuilding made losses that threaten the collapse of the whole group, the government stepped in to save conglomerate and to provide emergency loans, chaebols could always count on the government to help. So they would continue to borrow money from government owned banks. The bank were forced to continue borrowing money to â€Å"Korean Losers† and never got paid back. It continued ... ...he best solution would be the government to come up with the plan of restructuring Daewoo ( force it to sell off most of its businesses and concentrate on the key once) and for Daewoo to accept the plan as soon as possible. Also government should push on the chaebols to restructure ( mainly to cut off their size and concentrate on the most important businesses) because there is no place for old-style conglomerates in changing Korea, if they stay the same they will face the same problem as Daewoo did and will also badly affect future economic development of Korea. Korean government did come up with the plan of restructuring Daewoo in cutting down its size by selling off its businesses, as an example selling Daewoo Motors to General Motors and etc., giving independence to some of its big divisions such as shipbuilding. But this plan came too late and Daewoo did not implement it until it really got bankrupt. There is not Daewoo group any more. Most of it was sold and what is left is now called Daewoo International and has its main businesses in International Trade, Information, Project Organising, Research Development and some other ( www.daewoo international.com).