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Management Report

Management reports, briefs issued by Samsung Economic Research Institute

2013 Top Six Issues for Korean Companies

2013 Top Six Issues for Korean Companies

LEE Dong-Hun, KIM Jin-Hyuk, SEO Min-Soo, KIM Ji-Yoon

Nov. 26, 2012

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In 2013, persistent low growth in the global economy and new governments in major countries will shape the business environment. Korean companies will have to be cognizant of three major characteristics of the precarious situation ahead. First, the sluggish prospects will last through the year, prolonging a worldwide L-shaped slowdown. In other words, businesses will need to prepare for a difficult, long haul.

Second, the weak growth will not spare any region or industry. The currency crisis at the end of the 1990s struck Asia, the collapse of information technology (IT) bubble in the early 2000s roiled the US and the global financial crisis has been felt primarily in the US and Europe. Now, both emerging market economies and advanced countries are faltering. Although Korea and its Asian neighbors rebounded quickly from the initial shockwaves of the global financial crisis, their export-dependent economies have succumbed to the US and Europe contractions. Furthermore, not only traditional industries such as steel and shipbuilding, but high-tech industries such as IT, biotech and solar energy, and service industries are all experiencing a downturn.

Third, in the past, Korean companies could overcome a downturn by ramping up their economies of scale. The mantra now is to rationalize operations in order to increase quality and fitness to stay ahead of competition. They will have to continue to guard against "structural inertia" of conventional goal-setting that has involved expansion.

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