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SOUTH KOREA

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  1. SOUTH KOREA FRANCIS PIRON, Ph.D., 2013

  2. KOREA

  3. KOREA • HDI • .877 (#12) FINLAND .871, #16, JAPAN .884 #11 • INCOME INEQUALITY • GINI 31.6, R/P 10% = 7.8, R/P 20% = 4.7 • FINLAND 26.9; 5.6 3.8 • JAPAN 24.9 4.5 3.4 • CHINA 46.9 21.6 12.2 • DEMOCRACY INDEX • #20 8.11 FULL DEMOCRACY • FINLAND #7; 9.19 • JAPAN #22;8.08 • CHINA #136;3.14 • GENDER EMPOWERMENT • #61 .554 • FINLAND #3; .902 • JAPAN #57; .567 • CHINA #72; .533

  4. BACKGROUND • COERCIVE RELATIONSHIPS WITH CHINA, JAPAN & US • UNIQUE MANAGERIAL APPROACH BASED ON NEO-CONFUCIANISM • HIGHLY EDUCATED & COMPETITIVE SOCIETY (71% of pop. are internet users!) • ECONOMY CONTROLLED BY CHAEBOL (similar to Japanese KEIRETSU)

  5. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • MOSTLY MOUNTAINOUS COUNTRY • HIGH POPULATION DENSITY; 50 MILLION • ANTAGONISTIC AND COLLABORATIVE RELATIONSHIPS WITH CHINA & JAPAN => COMMON HERITAGE • SIGNIFICANT NATIONAL PRIDE: NATIONALISM • UNIQUE WORK ETHICS

  6. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • COUNTRY UNITED FOR OVER 1,000 YEARS • ESTABLISHED ADMINISTRATIVE SYSTEM • NATIONAL HOMOGENEITY • UNIFIED LINGUISTIC COMMUNICATION • CHINESE INFLUENCE • STRONG & OVER 1,000 YEARS OLD • IDENTIFIABLE IN EVOLVING KOREAN POLITICAL, LEGAL & SOCIAL SYSTEMS, AND ARTS & RELIGION

  7. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • RELIGIOUS & PHILOSOPHICAL INFLUENCES • CONFUCIANISM, TAOISM AND BUDDHISM FROM CHINA • CONFUCIANISM SHAPED CULTURE, SOCIETY, INSTITUTIONAL STRUCTURES & GOVERNANCE SYSTEMS Religious Affiliation, Censuses 1995 1985 No Religion 49.3% 57.4 Christian 26.3% 20.7 Protestant 19.7% 16.1 Catholic 6.6% 4.6 Buddhist 23.2% 19.9 Confucian 0.5% 1.2 Other 0.7% 0.8 • NEO-CONFUCIAN SOCIETY • CONFUCIANISM DEFINES SOCIAL RELATIONS AT ALL LEVELS • HARMONIOUS INTEGRATION OF INDIVIDUALS INTO COLLECTIVITY AS IN HARMONIOUS NATURE – PURSUIT OF HARMONY IS PARAMOUNT GOAL • SIGNIFICANCE OF TAOIST’S YIN & YANG – FUNDAMENTAL DUALISTIC RELATIONSHIP

  8. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • NEO-CONFUCIAN SOCIETY • OTHER RELATIONSHIPS INDICATE HIERARCHIES WITH FATHER AT THE HIGHEST • 4 HIERARCHICAL STRATA: • YANGBAN …… SCHOLARS & OFFICIALS • CHUNGIN ……..MIDDLE PEOPLE (TECHNICIANS, ADMIN.) • SANGMIN ……..COMMONERS (75% OF POP.) • CH’OMMIN …….BOTTOM OF SOCIETY • THUS, HIGH VALUE OF EDUCATION • MERITOCRATIC & SCHOLARLY SYSTEM • FILIAL PIETY – IMPORTANCE & ROLE OF ELDEST SON

  9. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • INFLUENCE OF CHRISTIANITY • EARLIER, ROMAN CATHOLICS • 1880s ON, PROTESTANT DENOMINATIONS • ASSOCIATION TO INDIVIDUALISM • KOREAN CHRISTIANS TEND TO BE OUTSPOKEN ADVOCATES … “UNKOREAN” BEHAVIOR • KOREAN SOCIO-CULTURAL VALUES HAVE BEEN THOROUGHLY ASSIMILATED IN KOREAN CHRISTIANITY • THUS, A RELIGIOUS PLURALIST SOCIETY • AS A RESULT, KOREAN BEHAVIOR PATTERNS EXHIBIT BOTH INDIVIDUALISTIC & GROUP-ORIENTED ACTIVITIES

  10. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE S. KOREAN MGMT CONTEXT • JAPANESE COLONIAL PERIOD • ALMOST HALF A CENTURY! • 1905-1945: KOREANS LOST OPPORTUNITY TO MODERNIZE ACCORDING TO THEIR NEEDS • INDEPENDENT DEVT. ONLY AVAILABLE THROUGH EDUCATION • COMPLEX NATURE OF KOREAN & NATIONALISM CAN BE TRACED TO JAPANESE OCCUPATION • POLITICAL ECONOMY • LIBERAL DEMOCRACY • PRESIDENT IS ELECTED FOR A SINGLE TERM … SOURCE OF CORRUPTION?

  11. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • GOVT-LED APPROACH TO INDUSTRIALIZATION • EXTRAORDINARILY RAPID PROCESS OF INDUSTRIALIZATION – CONTEMPORARY INDUSTRIAL POWER • 1960’s – NEED TO DEVELOP HEAVY INDUSTRIES • SERIES OF 5-YEAR ECONOMIC PLANS • FOCUS ON DEVT. OF EXPORT ORIENTED MANUFACTURING • STRONG GOVT. SUPPORT • 1997 ASIAN FINANCIAL CRISIS => NEED TO ADDRESS FUNDAMENTAL ECONOMIC ISSUES = CLOSE RELATIONSHIP BTW CHAEBOL AND GOVT. = “KOREA INC.” • GOVT. TYPICALLY CONTROLLED ACCESS TO CAPITAL AND THUS DICTATED STRATEGIES & OPERATIONS OF CHAEBOLS

  12. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • DRIVERS OF GLOBALIZATION & FOREIGN INVESTMENT POLICY • STRONG FDI POLICY (US, UK, JAPAN, GERMANY) • STRONG OVERSEAS DIRECT INVESTMENT POLICY (ASIAN, AMERICA & EUROPE) • GLOBAL MARKET ORIENTATION • 4 STRATEGIC MGMT ENABLERS • GOVT ENABLERS • DEMAND-SIDE ENABLERS • SUPPY-SIDE ENABLERS • MARKET ENABLERS

  13. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • GOVERNMENT ENABLERS • EXPORT-ORIENTED, PROTECTED DOMESTIC ECONOMY • ATTRACTIVE INVESTMENT CLIMATE • GRANTING OF DOMESTIC STATUS TO FOREIGN INVESTORS • FOREIGN INVESTMENT PROMOTION ACT • FINANCING & TAXATION BENEFITS FOR FDI • INITIATIVES TOWARDS REDUCING & DISMANTLING RESTRICTIVE TRADE BARRIERS

  14. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE

  15. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • DEMAND-SIDE ENABLERS • GROWING IMPORTANCE AS A GLOBAL PLAYER • GLOBAL COMPANIES HAVE DEVELOPED KEEN INTEREST IN KOREAN PC MARKET • AS A CENTER OF INDUSTRIAL INNOVATION, FOREIGN MNCs ARE EAGER TO ENTER KOREAN MARKET IN SEARCH OF COMPETITIVE ADVANTAGE (HI-TECH & SERVICE SECTORS) • HOME OF THE FUTURE

  16. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • SUPPLY-SIDE ENABLERS • NO LONGER A LOW LABOR-COST COUNTRY • WELL-EDUCATED, HIGHLY TRAINED WORKFORCE PROVIDES OPERATIONAL EFFICIENCIES • ADVANTAGE IN ABILITY TO ADOPT AND DEPLOY TECHNOLOGY • CONTINUOUS UPGRADE OF GOVT. INFRASTRUCTURE => ATTRACTIVE BUSINESS LOCATION

  17. THE KOREAN INNOVATION SYSTEM: OVERALL EVALUATION • STRENGTHS: STRONG COMPETITIVENESS IN SOME HIGH-TECH INDUSTRIES RAPID EXPANSION & SKILL FORMATION COMPREHENSIVE STRUCTURAL ADJUSTMENT STRENGTHENEING SCIENCE BASE • WEAKNESSES: STILL HEAVY CONCENTRATION OF RESOURCES ON CHAEBOL SME/VENTURE SECTOR NEEDS FURTHER DEVELOPMENT OPEN NETWORK CULTURE / INTERORGANIZATIONL LINKS SLOWLY EVOLVING

  18. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • MARKET ENABLERS • HIGHER DISPOSABLE INCOME • RISE IN LIVING STANDARDS • CHANGE IN CONSUMER TASTES & PREFERENCES • YOUNGER CONSUMERS – INTERNATIONAL GOODS • GROWING POPULATION (50 MILLION 2008-2009) • WELL-ESTABLISHED FOREIGN COMPANIES: KFC, PIZZA HUT, PHILIPS, SIEMENS, ETC. • WELL-OPENED DISTRIBUTION NETWORKS • GOVT. WANTS TO INCREASE COMPETITION IN DOMESTIC MARKET TO STIMULATE CHAEBOLs

  19. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • ORGANIZATIONAL CHARACTERISTICS OF CHAEBOLs • GROUP OF LARGE COMPANIES OWNED & MANAGED BY FAMILY MEMBERS & RELATIVES • DIVERSIFIED BUSINESSES • 3 TYPES OF CHAEBOLs • LATE 1950s CHAEBOLCREATED BY SELF-MADE MEN WHO BENEFITED FROM GOVT. RELATIONSHIPS • 1960s CHAEBOL FORMED WITH THE HELP OF FOREIGN LOANS • 1970s CHAEBOL RESULTS OF THE RAPID GROWTH IN EXPORTS & LOCAL DEMAND

  20. THE MGMT OF S. KOREAN INSTITUTIONAL INFRASTRUCTURE • CHARACTERISTICS OF CHAEBOLs • NOT ASSOCIATED/RELATED TO BANKS AS JAPANESE KEIRETSU • MORE DEPENDENT ON GOVERNMENT APPROVAL • SPREAD ACROSS MANY INDUSTRIES • HIGH LEVEL OF ENTREPRENEURSHIP • FAMILY-DOMINATED: STRICT BLOOD RELATIONSHIP • 3 TYPES OF CHAEBOL OWNERSHIP • DIRECT & SOLE OWNERSHIP – DESCENDANTS OF FOUNDER • DOMINATED BY A HOLDING COMPANY • INTERLOCKING MUTUAL OWNERSHIP – FOUNDER & FAMILY OWN THE HOLDING COMPANY

  21. CRITICAL TRADITIONAL, TRANSITIONAL & TRANSFORMATIONAL ISSUES IN KOREAN MANAGEMENT • INSIDE THE CHAEBOL • PRESENTLY - RADICAL CORPORATE RESTRUCTURING • ORGANIZATIONAL STRUCTURE • OWN MGMT STYLE – “K-TYPE MGMT “– INTERPETATION OF NEO-CONFUCIAN IDEAS + JAPANESE & AMERICAN INFLUENCES • UNIQUE BLEND OF WESTERN & EASTERN MGMT PHILOSOPHIES & PRACICES • TRADITIONALLY HARD-WORKING PEOPLE • CONCEPT OF EUI-YOK PROVIDES INTERNAL DRIVE, MOTIVATION TO SUCCEED & ACCOMPLISH SOMETHING OF VALUE … FROM WHICH THE GROUP OR COMPANY CAN BENEFIT • CONTRASTS WITH PROTESTANT WORK-ETHIC OF INDIVIDUAL PERFORMANCE

  22. CRITICAL TRADITIONAL, TRANSITIONAL & TRANSFORMATIONAL ISSUES IN KOREAN MANAGEMENT • INSIDE THE CHAEBOL • NEO-CONFUCIAN VALUES • ABSOLUTE LOYALTY TO HIERARCHY • TRUST BTW FRIENDS & WORKING COLLEAGUES • ALLIANCE & RESPECT TO PARENTS; ORDERLY, CLEARLY DEFINED CONDUCT BTW CHILDREN & ADULTS • SEPARATION OF HUSBAND & WIFE IN TERMS OF ACTIVITIES • CORPORATE CULTURE – SAHOON – K-TYPE MGMT • TOP-DOWN DECISION-MAKING, PLANNING, COORDINATION • AUTHORITARIAN, PATERNALISTIC LEADERSHIP • HARMONY-ORIENTED CULTURAL VALUES - INHWA • CENTRALIZED MANAGEMENT • FLEXIBLE LIFETIME EMPLOYMENT • COMPENSATION BASED ON SENIORITY & MERIT • HIGH WORKER MOBILITY

  23. CRITICAL TRADITIONAL, TRANSITIONAL & TRANSFORMATIONAL ISSUES IN KOREAN MANAGEMENT • HUMAN RESOUCE MGMT • RECRUITMENT & TRAINING • 3 CATEGORIES OF EMPLOYEES: • CORE – TOP MGMT • BASIC – PERMANENT STAFF • TEMPORARY • MOST HIRING IS DONE THROUGH WORD-OF-MOUTH • JOBS ARE NOT CLEARLY STRUCTURED, NO JOB DESCRIPTION • IN-HOUSE TRAINING - FOCUS ON MOULDING & NURTURING TOWARD BLENDING WITH COMPANY’S CORE VALUES & CULTURE • EXPECT UNRESERVED COMMITMENT TO THE COMPANY • COMPENSATION & PROMOTION • BASED ON SENIORITY & MERIT • PERFORMANCE APPRAISAL IS DIFFICULT • PROMOTION IS BASED ON SENIORITY, PEFORMANCE, PERSONALITY, FAMILY RELATIONSHIPS, SCHOOL & REGION