Cooperation Between Korea

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Cooperation Between Korea US in the Home
Appliances Industry

• 2004. 10
• Samsung ElectronicsDigital Appliance Business

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Contents
?. History of Korean and US Economic
Relationship ?. Need for Strategic Alliance and
Business Ties ?. Need for Strategic Alliance in
the Home Appliances Industry ?. Success Factors
in Alliance and Cooperating Relationship
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?. History of Korean and US Economic Relationship
? Timeline of Economic Relationship Between Korea
and US - 1950s Support from US based on
Korean national security - 1960s Based on
stable trade relationship, Korea acquires closer
economic ties with US after being
successful in export driven economy - 1980s
Friction between Korea and US relationship due to
protective trade policy in the US - Late
1990s A renewed relationship after economic
crisis in Korea through competition and
cooperation between Korea and US.
Different Periods in Korea and US Economic
Relationship
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? 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 Koreas 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.
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?. 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
Factors Leading to Strategic Alliance
High Development Cost Technology Convergence
Short Product Life Cycle
Strategic Alliance
Surplus in Supply
Limitless Competition
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?. Need for Strategic Alliance in the Home
Appliances Industry
? Complementary Cooperation Between Korea and US
- Complement our strength by promoting Koreas
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.
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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
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?. 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.
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Strategic Alliance and Cooperation - For a
WinWin Strategy -

• Limitless Competition
• Economy of Size
• Economy of Speed
• Increase Business
• Capability
• Strengthen Competitive
• Capability

• High DevelopmentCost
• 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
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