Daewoo Essay

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The Failure of Daewoo Motor America Brent McClain LDR/531 23 May 2011 Annie Moats The Failure of Daewoo Motor America In Korean, Daewoo means “Great Universe.” Looking back at what Daewoo had become before their collapse in 1999, one would have to acknowledge that the Daewoo Group operated in almost every industry in the universe to be sure. They had interests in electronics, shipbuilding, construction, commercial vehicles, personal vehicles, small arms, musical instruments, and investing. The Group consisted of 275 subsidiaries with interests in more than 100 countries, and they were the second largest company in South Korea, trailing only Samsung in size and revenue (The Economist, 1999). Kim Woo-Jung, the son of the provincial governor of Daegu, founded the Daewoo Group in 1967. Benefitting from the pro-growth business incentives of the Park Chung Hee Korean government, the Daewoo Group grew to one of the largest business conglomerates, or chaebol, in South Korea. The Daewoo Group was an integral part of South Korea’s economic landscape of the 1970s and 1980s and, by the mid-1990s, their annual revenue was over $60 billion while employing more than 200,000 people in South Korea and overseas (The Economist, 2000). At the time of the Asian Financial Crisis of 1997-1998, the Daewoo Group accounted for nearly 15% of Korea’s gross domestic product. The Korean government under the Park Chung Hee administration supported the chaebol by offering them loans and awarding them non-competition contracts and special incentives because the chaebol were Korea’s engines of commerce and employment. In Korean, chaebol means ‘family’ but their business practices resembled more of what western business would call monopolies with government sponsored positive discrimination. The Korean government, however, demanded loyalty for their favoritism. One example
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