I read a article about the degeneration of STARBUCKS. STARBUCKS is one of the largest franchise companies in the world. But in 2007, the stock value was nearly halved. Then, what's happened to them?
The problem is rapid expansion of its business. It sounds like a parodox. But the main point is in there. When STARBUCKS started it was so localized and people who live the location enjoyed the localized service and taste of STARBUCKS. But as STARBUCKS growed more and more, the service of STARBUCKS is standardized. So now STARBUCKS is planning a localization. Consequently, the key of the survival is differentiation even in the same franchises.
Then let's consider the way of innovation in Korea large companies(also called conglomerate- a very special case in the world). Maybe you know IMF. In 1997 Korea was in the condition of nonredemption. So Korean government requested capital to the IMF and many large companies and banks were under bankruptcy. But a few companies like LG, SAMSUNG successfully overcame the test of IMF.
LG was troubled after IMF because LG's main products are White Goods. White Goods are some products which improve convenience of customers in daily life. And White Goods markets were depressed after the crash of IMF. So LG was so dangerous at that time. But they applied the 6-sigma to the evaluation of their products, and they can make specialty in their markets. 6-sigma is a way to achieve strong quality by the viewpoint of customers. And now LG is the leading company in White Goods.
Second example is SAMSUNG. Recently the images of SAMSUNG were completely changed. When you see the premierleague soccer team 'Chelsea', you can see the player's uniform. And there is SAMSUNG logo. Only a few years ago, the reputation of SAMSUNG was limited to the domestic economy. But now they are global corporation! How they could do this innovation?
SAMSUNG innovated the traditional deficit(or red) structure to the black structure by doing value innovating activities. And also they developed the LCD techniques and they are now the number one producer of LCD in the world. They didn't spare money in advertising and promotioning themselves.
In the two cases of Korean companies, I can find the ways of company survival. These are careful marketting and ceaseless technic innovations. Although my opinion is not correct, but I think it's the main point of businesss.
Thank you to read my crude writing
20700067 Kim Nam Joong
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