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WORLD IN 2015 AND STRATEGIES UNDER UNCERTAINTYSea-Jin Chang

NUS Business School

World GDP Growth in 2015

Japan 1.6

Eastern Europe 2.1

Asia 6.0

Australia 2.7

Western Europe 1.4North America 3.2

Latin America 2.8

Middle East 4.1

Africa 4.5

Source: Economist

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Source: Economist

China 7%

Indonesia 5.9%

Malaysia 5.4%

Singapore 3.8%

Korea 3.5%

India 6.5%

Source: Economist

Vietnam 6.6%

Asia still leads world growth

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However, we need to face a long-term downward trend

Source: Eurostat

Same in Korea

출처 : 통계청「경제활동인구조사」

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New World Order: labor< capital< idea

Further globalization of labor

Further automation

Creative ideas will count more

Unskilled labor will be further squeezed in the future

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2015

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Korea in mid-life(income) crisis

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Korean firms in mid-life crisis

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Sony vs. Samsung: Development Stage

1946 20151969

Key:Sony Samsung

Samsung: now, where to go???

Time

Sony: Where to

go???

Business Level

Samsung: Clear direction

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Highly Educated People

“One genius can feed 10,000 others…” Chairman Lee, 2002

Samsung attracts top

talents in Korea

12% people have Ph.D.

or M.S. degree

Recruiting Hi-potential employees

Recruit top manages and

engineers (S-class

employees)

Tap foreign talents

Samsung tries to recruit more foreign talents and

give more responsibilities to foreign subsidiaries.

Samsung may need more overseas M&As.

Creativity and globalization are the key for the future.

Korean firms in the eyes of locals

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2.5 2.7 2.9 3.1 3.3 3.5

China

India

Greece

Brazil

Portugal

Ireland

Poland

Korea

UK

Italia

Australia

France

Canada

Japan

Germany

Sweden

US

Bloom, and J. Van Reenen, Why Do Management Practices Differ across Firms and Countries?, Journal of Economic Perspectives, 2010. 한국데이터는카이스트경영대학 Executive MBA 학생들에대한 2014년설문인터뷰

Management Practices Scores

2.7

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

Monitoring & Control Target Management Incentive Management

Korea

Canada

Japan

Germany

Sweden

US

Comparison with top 5 countries

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High

Low

LowHigh Relative Cost Position

Productivity Frontier shifts with innovation

Samsung, where to go?

Differentiation

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Strategy = Map

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Strategy = Map = Where+ How

Innovation

New product

New business

Globalization

……

Creativity

Open innovation

M&A, alliances

Global talents

……

+ ?

Area C:

∆ confidence<0

Area A:

∆ confidence> ∆ capabilities>0

Area D:∆ capa-bilities<0

Confidence

Cap

abilities

Low High

Low

High

Area B:

∆ capabilities> ∆ confidences>0

Ability to choose the best option

Maintain one’s choice despite of noisy feedbacks from environments

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Strategic confidence

• Goal• Respectable goals, visions, missions of a firm

• Experience• Put different weights on noisy feedbacks from external

environments

• Experiment• Small scale tests and feedbacks from various internal parties.

• Understanding of external environments• Interpret feedback from external environments with more

confidence

Strategy = Map = Where+ How

Innovation

New product

New business

Globalization

……

Creativity

Open innovation

M&A, alliances

Global talents

……

+ Why