The Fall of Daewoo Motor America
The Fall of Daewoo Motor America
LDR/531
The Fall of Daewoo Motors America South Korea-based Daewoo Motors America, a branch company of the Daewoo Group entered financial crisis in the late 1990s that ultimately led to the company 's bankruptcy in 1999 (Chavis). This report will discuss the organizational behavior led to the company’s demises, and will also examine ways that this could have been avoided as well as compare and contrast how leadership and poor management contributed to the failure. Daewoo Motors America business strategy was to maximizing growth through marketing the company’s automobiles in emerging markets throughout Southwest Asia at deep discounted prices in an effort to get a foothold on the market (IBS Center for Management Research). This effort was a costly one though, as it pushed Daewoo Motors America as well as the Daewoo Group further and further in debt with little to no cash return. Daewoo Motors financed the preponderance of the materials and manufacturing process. This along with the deep discount pricing of their vehicles left company with very little cash flow to support and build the company to the level that was anticipated and demanded by chairman Kim Woo Choong. This along with labor disputes over low wages and a struggling South Korean economy also played an integral role in the bankruptcy of Daewoo Motors America (IBS Center for Management Research). I think that if Daewoo Motors would have concentrated on one market at a time it would have allowed them to increase cash flow from sales in those emerging markets to reinvest in the company, and than farther expand the company and market share on a broader bases throughout Southwest Asia. Daewoo however tried to tackle the wide area of Southwest Asia all at once instead of piece by piece. This approach left them with only one option, to finance the growth, which left them in debt to creditors with no notable return on their investment (IBS Center for Management
LDR/531
The Fall of Daewoo Motors America South Korea-based Daewoo Motors America, a branch company of the Daewoo Group entered financial crisis in the late 1990s that ultimately led to the company 's bankruptcy in 1999 (Chavis). This report will discuss the organizational behavior led to the company’s demises, and will also examine ways that this could have been avoided as well as compare and contrast how leadership and poor management contributed to the failure. Daewoo Motors America business strategy was to maximizing growth through marketing the company’s automobiles in emerging markets throughout Southwest Asia at deep discounted prices in an effort to get a foothold on the market (IBS Center for Management Research). This effort was a costly one though, as it pushed Daewoo Motors America as well as the Daewoo Group further and further in debt with little to no cash return. Daewoo Motors financed the preponderance of the materials and manufacturing process. This along with the deep discount pricing of their vehicles left company with very little cash flow to support and build the company to the level that was anticipated and demanded by chairman Kim Woo Choong. This along with labor disputes over low wages and a struggling South Korean economy also played an integral role in the bankruptcy of Daewoo Motors America (IBS Center for Management Research). I think that if Daewoo Motors would have concentrated on one market at a time it would have allowed them to increase cash flow from sales in those emerging markets to reinvest in the company, and than farther expand the company and market share on a broader bases throughout Southwest Asia. Daewoo however tried to tackle the wide area of Southwest Asia all at once instead of piece by piece. This approach left them with only one option, to finance the growth, which left them in debt to creditors with no notable return on their investment (IBS Center for Management
References: Chavis, J. (n.d.). History of daewoo. Retrieved from http://www.soyouwanna.com/history- daewoo-24659.html IBS Center for Management Research (n.d.). Retrieved from http://www.icmrindia.org/casestudies/catalogue/Business Strategy1/ BSTR034.htm Lopez, J. (2000). Daewoo collapse to have global consequences. World Socialist Web Site, Retrieved from http://www.wsws.org/en/articles/2000/11/dae-n18.html