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Different Growth Strategies Presented by Korea’s Top Two Group Successors
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Different Growth Strategies Presented by Korea’s Top Two Group Successors
  • By Jung Suk-yee
  • November 9, 2015, 02:15
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As the growth of Korean companies has been at a standstill for years, Samsung Electronics Vice Chairman Lee Jae-yong and Hyundai Motor Vice Chairman Chung Eui-sun have come up with different strategies to end the standstill, attracting attention from industry sources. Accordingly, the future landscape of the Korean economy will be greatly affected by the decisions of the next leaders of the nation’s top two business groups.

Vice Chairman Lee has sold businesses, which were cherished by Chairman Lee Kun-hee, and is concentrating on the group’s major businesses. Through the downsizing, he is placing the focus on qualitative growth rather than quantitative growth. On the other hand, Vice Chairman Chung is preparing to make a new leap through a vertical integration strategy, which is led by his father Chairman Chung Mong-koo.

Lee has been involved in management and is presenting a selected concentration strategy, targeting the market. This is because he thinks that Samsung has been possessing subsidiaries of diverse businesses through vertical integration so far, but failed to come up with measures to create synergy effects between them. With two Big Deals with Hanwha and Lotte, Samsung completely closed down its chemicals and defense businesses. Accordingly, the company can now focus on the information technology (IT) and electronics, biotechnology and financial businesses through reorganization, which has begun from last year, with the completion of M&As with a series of overseas firms at the same time.

As this business reorganization has finished, Samsung’s keynote of convergence is expected to gain further momentum. It is shaping up to be a B2B2C strategy, which is Lee’s new business strategy that aims for both business to consumer work (B2C), which Samsung is good at, and business to business (B2B) projects, which Samsung should be good at in the future, at once.

Meanwhile, Chung declared the new leap of Hyundai Motor with the launch of the Genesis brand on Nov. 4. In the last decade, critics inside and outside of the group have been raising the need of the premium brand in order to become one of the global top three automakers. However, the management didn’t easily make the decision.

Until now, Hyundai Motor has been accumulating its internal competence for the new brand in all areas, including materials, planning, testing, powertrains, electronics and design, in the past 10 years. In the end, the group has additionally secured competitiveness in body stiffness, driving efficiency and design. In particular, the company has become the only one with a system that develops and produces automotive steel sheets itself among global major automakers. Also, it now has the structure that can dramatically improve car efficiency from the stage of basic materials.

Hyundai Motor has shown its confidence at the Genesis brand launch event as well. Chung said, “The Genesis is the first car using Hyundai Steel’s advanced high strength steel [AHSS] from the planning stage. It has evolved the previous method, which develops cars according to materials, to the new method, which develops materials according to cars.”

An official from the industry said, “Hyundai Motor is the automaker which uses AHSS the most. The price competitiveness through the vertical integration will play a big role in Chung’s premium brand strategy as well.”

An official from the Korean Academic Society of Business Administration said, “As the Korean economy faces the crisis, it is interesting to see that Lee and Chung have made different choices. With the management going from the second to third generation successors, various measures are appearing for domestic firms’ qualitative growth.”