Kim Woo – Choong, Chairman of Daewoo, Korea’s fourth-largest business group, is going against the flow: Organizational Behaviour Assignment, USM, Malaysia

Kim Woo – Choong, Chairman of Daewoo, Korea’s fourth-largest
the business group is going against the flow. While many companies are trying to
decentralize, giving more responsibilities to low-level managers. Kim is
moving in the opposite direction, taking control back into his own hands.
Whether his centralization of power is viewed as a step backwards or a step
into the future will depend largely on his ability to reverse Daewoo’s recent
fortunes.

Kim founded Daewoo, the newest of Korea’s four big business
conglomerates (chaebol) in 1967, and by 1988 it included twenty-eight
companies in trade, financial services, construction, and the manufacture of
everything from machine guns to ships to fax machines. As his business
grew, Kim, like many entrepreneurs tuned corporate leaders, gradually gave
up control of many Daewoo companies and spent much of his travelling
around the world, looking for new markets.

But trouble began brewing for the chaebol in the late 1980s under
Korean President Roh Tae-Woo. At a time when former President Chun Doo
Hwan’s close ties with the chaebol were the subject of sensational televised
hearings, Roh decided to end the government’s support of the four big groups and give smaller companies a chance to compete.

Changes in the government’s support were not Kim’s only problem.
The increase in democracy in South Korea and violent strikes by some
workers ended years of cheap and docile Korean labour. Some of Korea’s
trade barriers have begun to come down, the currency has been revalued,
and the debt that chaebol built up while amassing market share has now
become a burden. From a Western perspective, the chaebol was over
diversified and poorly managed.

In 1990, Kim began what he calls a “revolution” at Daewoo. In early
January, 5,000 of Daewoo’s top managers came to the Seoul Hilton
International for their yearly meeting with the chairman, but the usual spirit of
self-congratulation was missing. Many of them had already received letters
from Kim criticising their “poor performance and easy-going manner” scores
were “retired”.

Under Kim’s pressure, Daewoo’s bureaucracies began to change. At
Daewoo’s subsidiary, Seoul Hilton International, 200 middle managers lost
their jobs, while the Daewoo trading company cut one-third of its middle
managers.

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