INTRODUCTION
This case presents such blatantly bad management that it will be hard for students to believe. Virtually everything that could be done wrong was shown by Daewoo management. It bought into a troubled venture (Saehan Motor Company), produced poor-quality cars, planned poorly, over-borrowed, and had criminally fraudulent senior managers. I am not sure that students can learn how to avoid the “mistakes” from this case because it is quite possible that the only purpose Kim had for the company was to enrich himself. If the CEO views the company as a personal piggybank instead of an organization that should serve a variety of stakeholders’ interests, there is little that other managers or workers can do.
This case presents the opportunity to discuss corporate governance in some detail. The case does not present any information about Daewoo’s governance structure, but it seems clear that Kim ran the company as a dictator, with no checks and balances. The similarities to Enron, WorldCom, and other U.S. corporate scandals are not to be dismissed.
ANALYSIS
I. GENERAL ENVIRONMENT
A. Technology—Technology did not play a significant role in this case.
B. Demographic trends—Demography did not affect Daewoo in its implosion.
C. Economic trends—The Southeast Asian financial crisis certainly played an important part in the Daewoo story. However, other Korean and Japanese auto manufacturers suffered through the same conditions without imploding as Daewoo did. Economic downturns can be weathered by sound planning and financial controls, neither of which occurred at Daewoo.
D. Political/Legal—There is not enough information in the case to know what role the South Korean political and legal environment played in this disaster. It would ...