Management reports, briefs issued by Samsung Economic Research Institute
Five years after the global financial crisis, Korean companies are feeling the pinch yet again. Earnings rebounded strongly in 2009 and 2010, but have been steadily slowing since then. In the first half of this year, sales growth stalled. The situation starkly contrasts with robust corporate performance that was evident five years after the 1997 currency crisis.
This raises concerns on whether Korean companies are fully cognizant of the severity of the current weakness or have become complacent. They who were slammed hard by the 1997 crisis, an Asia flu, and their aggressive responses brought quick results amid a global economy that had not slowed. The 2008 crisis, of course, has been felt worldwide and many countries remain stuck below pre-crisis economic levels. Furthermore, competition is more intense, with Chinese companies rising on the back of a vast domestic market, Japanese rivals reviving on yen depreciation, and domestic social demands on Korean companies intensifying.
The current challenges clearly require new management systems. This paper examines earnings performance (quantitative aspects) of Korean companies and how their business management has transformed (qualitative aspects) since the global financial crisis and how they can lead to new directions for Korean businesses.
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