Industry Sung Jin Kim

Cooperation Between Korea & US in the Home Appliances Industry: 

Cooperation Between Korea & US in the Home Appliances Industry 2004. 10 Samsung Electronics Digital Appliance Business

Contents: 

Ⅰ. History of Korean and US Economic Relationship Ⅱ. Need for Strategic Alliance and Business Ties Ⅲ. Need for Strategic Alliance in the Home Appliances Industry Ⅳ. Success Factors in Alliance and Cooperating Relationship Contents

Ⅰ. History of Korean and US Economic Relationship: 

Ⅰ. History of Korean and US Economic Relationship □ Timeline of Economic Relationship Between Korea and US - 1950’s : Support from US based on Korean national security - 1960’s : Based on stable trade relationship, Korea acquires closer economic ties with US after being successful in export driven economy - 1980’s : Friction between Korea and US relationship due to protective trade policy in the US - Late 1990’s : A renewed relationship after economic crisis in Korea through competition and cooperation between Korea and US. Different Periods in Korea and US Economic Relationship

Slide4: 

□ Importance of Korean and US Economic Relationship - Size of export to US from Korea has decreased from 63% in 1970 to 18% in 2003 but it is still Korea’s second largest export market especially in the home appliances market, where it takes up 18% of total electrical/electronics export to US. - Imported technology from US for development and production of core components and products take up 60% of entire all technology imports. - Samsung Electronics is especially very active in strategic alliance partnership with American companies in the IT industry such as IBM, EMC, Maytag, Dell, etc.

Ⅱ. Need for Strategic Alliance and Business Ties: 

Ⅱ. Need for Strategic Alliance and Business Ties □ Era of Limitless Competition - Strategic cooperation is necessary to survive in the world market. . No company is capable of having all the necessary tools to compete in this rapidly changing world business environment and thus need to join hands with other companies to acquire the tools they lack. . Strategic alliance is a powerful alternative to borrow other companies’ capabilities to stay competitive. □ High Development Cost and Convergence of Technology - The cost of development is on the rise and shortened product life cycle has forced companies to form ties with other companies in order to bring in the technology they lack. - Need for companies from different industries to come together to converge technology from different areas.

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□ Managing the Surplus Production Capability - Large surplus of supply in numerous industries around the world. - Companies can only survive with corporate restructuring and production allotment Strategic Alliance Short Product Life Cycle High Development Cost Technology Convergence Surplus in Supply Limitless Competition Factors Leading to Strategic Alliance

Ⅲ. Need for Strategic Alliance in the Home Appliances Industry: 

□ Complementary Cooperation Between Korea and US - Complement our strength by promoting Korea’s development capability (Speed, Cost, New Technology, Global Network) to combine with US brand power, core technology, etc. □ Environmental Issues Increase Development and Operating Costs - Develop wet cleaning technology and pollution free detergents to solve environmental problems created by the use of dry cleaning detergents. - Cooperation and alliance within the home appliance industry as well as between home appliance and chemical industry will be necessary. Ⅲ. Need for Strategic Alliance in the Home Appliances Industry

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□ Development and Implementation of Core Technology for Digital Home Appliance Products - To reduce risk from implementation and commercialization of IT on home appliance products. - To acquire access to a secure market by sharing distribution networks and establishing OEM ties. - Need for a partner to co-develop new products for commercialization □ Mutual Gains from Global Ties Between Korea and US - High growth opportunity can be obtained in China by having US capital and technology experience the Korean market before heading to China. - This cooperation with US will allow further globalization in Korea.

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□ Areas of Alliance and Cooperation

Ⅳ. Success Factors in Alliance and Cooperating Relationship: 

□ Need for a Win-Win Strategy with the Partner Company - Companies part of the strategic alliance and cooperation can gain from the partnership when the goal is focused in creating value. . Interaction should not just settle on simple technology transfers and know-how exchanges but partnership companies should closely interact and learn from each other. . Reduced resistance from competition and promotion of innovative alternatives for the future of involved companies can be secured by creating new values. □ Have Competition and Cooperation at the Same Time Based on Mutual Faith - The goal of strategic alliance can be achieved by having cooperating relationship based on mutual faith. Ⅳ. Success Factors in Alliance and Cooperating Relationship

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Strategic Alliance and Cooperation - For a Win–Win Strategy - Limitless Competition Economy of Size Economy of Speed Increase Business Capability Strengthen Competitive Capability High Development Cost Decrease in product life cycle Require shorter development time Convergence of New Technology Convergence within an industry Convergence across difference industries Bilateral Complement Create new value Bilateral interaction, learn from each other Competition along with cooperation Survival in the Era of Limitless Competition