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

Daewoo Group and Financial BusinessProblem DefinitionDaewoo group started as a small cloth company and in just 20 yearsdeveloped into second largest Korean chaebol ( family ownedconglomerate). It had over 250000 employers worldwide, over 30domestic companies and 300 abroad subsidiaries, generating sales ofmore than 100 billion dollars annually. However, in 1999 it seemed thatthe golden days of Daewoo were over as it was faced with over 50billion dollars dept and had to decide to apportion some of its business to carryon. Can Daewoo really survive and if yes, how? The roots of Daewoos crisis are in a) Korean Economic Systems Structure, Chaebols and Asian Crisis b) Daewoo corporate structure, Kim Woo-Choong and his policiesThe briny problem is that Korean economic system is ready for changeand already changing, so does the establishment and its policies. However,the chaebols such as Daewoo are biography in the past and find it difficult toadapt to changes. The question is whether there is any place in a changingKorea for chaebols at all or they go out be soon replaced by smaller but moreefficient companies? Problem JustificationKorean Economic System, Chaebols and Asian crisisSouth Koreas mad rush economic growth was initiated by late dictatorPark Chung-hee in the early 1970. Park saw export growth as the key foreconomic growth. He provided cheap loans and tax benefits to nurtureDaewoo and other Korean business into conglomerates that massproduced for export markets( http//detnews.com/2001/ autos). Most ofChaebols were family owned and all of this families were affiliated to thegovernment which would give them lots of support and get their loyalty.As a trouble would appear ,as in example of Daewoo problem in the1980s when Daewoo ship building made losses that threaten the collapseof the whole group, the government stepped in to save conglomerate andto provide emergency loans, chaebols could always count on thegovernment to help. So they would continue to borrow money fromgovernment owned banks. The bank were forced to continue borrowingmoney to Korean Losers and never got paid back. It proceed ... ...he best solution would be the government to come up with the externalize ofrestructuring Daewoo ( force it to sell off most of its businesses andconcentrate on the key once) and for Daewoo to sustain the plan as soon aspossible. Also government should push on the chaebols to restructure (mainly to cut off their sizing and concentrate on the most importantbusinesses) because there is no place for old-style conglomerates inchanging Korea, if they stay the same they will face the same problem asDaewoo did and will also badly affect future economic development ofKorea. Korean government did come up with the plan of restructuring Daewoo incutting down its size by selling off its businesses, as an example sellingDaewoo Motors to General Motors and etc., giving independence to someof its big divisions such as shipbuilding. But this plan came too late andDaewoo did not implement it until it really got bankrupt. There is notDaewoo group any more. Most of it was sold and what is left is nowcalled Daewoo International and has its main businesses in InternationalTrade, Information, Project Organising, Research Development and someother ( www.daewoo international.com).