What Are the Benefits and Disadvantages of the Korean Chaebol Structure?

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What are the benefits and disadvantages of the Korean Chaebol structure? Definition of a Chaebol: “refers to a South Korean form of business conglomerate. They are powerful global multinationals owning numerous international enterprises. The Korean word means "business family" or "monopoly" and is often used the way "conglomerate" is used in English” (source: Wikipedia) Benefits: * Economies of Scale and Scope: As the Chaebols have diversified into various industries, they are composed of several companies that achieve economies of scale: they lower the average cost per unit through increased production and through the number of different goods produced. * Knowledge and experiences on diversified business: Having cumulated knowledge and experiences of many companies in a Chaebol helps to improve the decision-making but also to find new business opportunities. * Reputation and brand name: The established reputation and the recognition of a Chaebol’s brand name make its diversification easier. * Avoiding the risk of a single product business: If we take the example of what happened with HCI in the 1970’s, we can notice that companies had to diversify, creating by the way the Chaebols, in order to avoid bankruptcy. Disadvantages: * Lack of business transparency + Autocratic CEO: the Chaebols are under the control of influent families, so we usually find that the CEO is not only the manager, but also the owner. That’s why the decisions he makes are not always the best for the company, and the lack of control by the Board of directors or Auditors is also leading to the opacity of the decision-making process. * Prolonging lives of unprofitable businesses: Chaebols’ management strategy has always been to grow in size, sometimes ignoring the profitability, that’s why when a business is no more worthy, it will be maintained instead of being cut,
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