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Case
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Reference no. 302-151-1
Published by: IBS Center for Management Research
Published in: 2002

Abstract

The case examines the problems faced by South Korea-based Daewoo Motors, the flagship company of the Daewoo Group. Daewoo Motors expanded rapidly in several risky and uncertain markets by taking huge debts. The company offered its products at low prices and with huge discounts, thus further increasing its losses. The case also discusses how financial mismanagement by Daewoo''s promoters and the Southeast Asian Financial Crisis in 1997-1998 ultimately led to the company''s bankruptcy. In early 2000, the South Korean government invited bids for the sale of Daewoo Motors. After two years of negotiations, Daewoo Motors was finally acquired by the US automaker General Motors (GM). The case is designed to enable students to: (1) study and evaluate Daewoo Motor''s expansion in developed and developing markets; (2) examine major flaws in Daewoo''s expansion strategy and their consequences; (3) examine the impact of the international expansion strategy on the Daewoo Group and Daewoo Motors'' financial performance; (4) study the role of culture, ethical standards and corporate governance practices in the survival and success of large, diversified companies; and (5) analyse the synergies GM expected to gain by acquiring a stake in Daewoo Motors. The case is aimed at MBA/PGDBA students and is intended to be a part of the economics, politics and business environment curriculum.
Location:
Industry:
Size:
Large
Other setting(s):
Late 1990s to 2002

About

Abstract

The case examines the problems faced by South Korea-based Daewoo Motors, the flagship company of the Daewoo Group. Daewoo Motors expanded rapidly in several risky and uncertain markets by taking huge debts. The company offered its products at low prices and with huge discounts, thus further increasing its losses. The case also discusses how financial mismanagement by Daewoo''s promoters and the Southeast Asian Financial Crisis in 1997-1998 ultimately led to the company''s bankruptcy. In early 2000, the South Korean government invited bids for the sale of Daewoo Motors. After two years of negotiations, Daewoo Motors was finally acquired by the US automaker General Motors (GM). The case is designed to enable students to: (1) study and evaluate Daewoo Motor''s expansion in developed and developing markets; (2) examine major flaws in Daewoo''s expansion strategy and their consequences; (3) examine the impact of the international expansion strategy on the Daewoo Group and Daewoo Motors'' financial performance; (4) study the role of culture, ethical standards and corporate governance practices in the survival and success of large, diversified companies; and (5) analyse the synergies GM expected to gain by acquiring a stake in Daewoo Motors. The case is aimed at MBA/PGDBA students and is intended to be a part of the economics, politics and business environment curriculum.

Settings

Location:
Industry:
Size:
Large
Other setting(s):
Late 1990s to 2002

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