Lumongsod, Mary Nida S.

CE – 3B
Engineering Management TTh 9:20 – 10:20 AM

1. What are the advantages and disadvantages of a hands-off, decentralized managements

approach?
Decentralization is the 'tendency to scatter decisions in an organized structure.' Its
drawback is that it is not until you choose both responsibility and authority that decentralization
works. A decentralized organization does not confine itself to a few top managements; instead,
managers at different levels make vital operational choices concerning their sphere of
responsibility.  The system decides the level where the action is most adjacent. Its advantages
include the fact that it aids people. It has quicker, more responsive decisions, more flexibility,
more initiative at lower levels, less coordinating effort, less administration, and redundant
capabilities. The government now controls its market. Response time is reduced by shifting
decision making down the structure, so the person making the decision is closer to the situation.

2. How can Daewoo stay competitive with the Japanese?

In this tight linkage, the auto industry is essential to improve the countries industry.
Daewoo can stay competitive with the Japanese by adopting the following measures: Efficient
Production Methods and High-Quality Products. Japanese are known for producing high-quality
products in the international market, especially automobiles and electronics. In the already very
competitive global market, Daewoo needs to incorporate effective production practices and high-
quality goods. In the era of global recession and financial crises facing Daewoo, mergers and
joint ventures will also assist them. Joint Ventures would likely generate dividends and
complement their product line for them to grow into new markets. Daewoo's long-term goal of
becoming a self-governing automaker and ranking in the top ten worldwide would be impossible
to achieve without the advancement of globalization.
3. What were some of the controllable and uncontrollable factors in this case? How should
Mr. Kim have responded to those factors?
Government Interventions, Labor Market, Global Operation, and Product Quality were
all factors that influenced Daewoo's overall performance. Government policy was the one that
shielded Daewoo by offering huge subsidies, unrestricted cheap credit, and protection from
foreign competition. The cost of these services, however, was complete allegiance to the
government. For labour Market, the company had a hard time managing their workforce because
of their young age and growing discontentment as Koreans start to prosper. Lastly, working in a
Global Economy necessitates free trade, forcing the Korean government to open its market;
sadly, the market regards Korean goods as low quality.

The Controllable Factors are the Company's Physical Standards, Cost Standards, and
Capital Standards. Material used, employee input, services rendered, labor hours per unit of
output, production units per machine hour, and quality goods were all included. Labor, material,
machine, and marketing costs.

Mr. Kim could have reacted to the considerations by getting Daewoo out of the crisis by
controlling intangible norms such as the company's climate, values, and culture, input from
employees and feedback from consumers; restructuring and decentralization; appointing young,
energetic managers; and entering into joint ventures with established businesses. Selling defunct
assets and rebranding automobiles. It was very wrong of him to suddenly disappear and leaving
his company.

4. What do you think Daewoo's expansion into Europe? What are the advantages and risks
for the company?
Daewoo's entry into Eastern Europe benefits from the region's vast potential car market.
When Daewoo made its investment decision, the world's largest automakers had not yet entered
these markets. Daewoo hence has a first-mover advantage in these markets. Furthermore, Eastern
Europe's low labour costs and a strong technological foundation in mechanical engineering
promise high-quality goods at a low cost.
 Despite Daewoo's ambitious plan, it is considered extremely risky. Daewoo must be able
to maintain its current position in the face of new competitors. Daewoo may achieve this through
a robust distribution network, superior after-sales service, product quality enhancements, and
competitive pricing. Also, the European market is still crowded with competitors. It would be
impossible for them to gain a foothold in Europe as a non-European firm.

5. Why do you think GM acquired the company, while Ford did not?
GM needed the Koreans' design skills, and Seoul did not want to lose the tens of
thousands of jobs offered by the company and its hundreds of suppliers; the jobs were too vital to
GM's future. GM Daewoo may play a more significant role in the New GM's global business
strategy. 

I think Ford did not obtain Daewoo because Ford already knows that Daewoo was not
worth purchasing, not at the billion-dollar level.

6. What problems can GM-Daewoo expect in the future?

Despite the progress made by GM Daewoo, some headwinds can still be met. General
Motors wasn't the first or last automaker to enter the world car market, so it would ultimately
have to compete with larger and stronger companies. The brand image is still to be rebuilt
because of the bankruptcy and unexplained disappearance of President Kim; so it will take a
while before investors and buyers will trust them again.