1. What were the advantages and disadvantages of Daewoo’s original strategy of manufacturing goods for marketing by other companies under the brand names of those companies? In 2005 Daewoo Corporation, once Korea’s second largest chaebol, no longer existed. The company’s former Chairman, Woo Choong Kim, was under indictment for financial and accounting irregularities and was reportedly hiding out somewhere overseas.

Some of Daewoo’s component companies had gone bankrupt and been shut down, others had been reorganized under creditor supervision and were operating as independent enterprises, and some had been acquired by other Korean or foreign firms (using the name Daewoo, or other names). A controlling interest in the bankrupt Daewoo Motor Company in Korea, and a number of its overseas sales units, was purchased from its creditors by General Motors and partners in 2002.

GM is now trying to rebuild the Daewoo brand in Europe. In 2004 Daewoo’s automobile plant in China was purchased by General Motors and a Chinese partner.

There had been strong economic and political reasons for trying to keep Daewoo’s component parts operating even after the corporation had been forced into a debt restructuring program by its creditors in 1999. Daewoo Corporation had subsidiaries in all major Korean industries, including consumer electronics, appliance manufacturing, steel making, shipbuilding, heavy machinery production, construction, textiles, securities, automobile manufacturing, export marketing, and others. The company was a major employer with 150,000 workers, accounted for 5% of Korea’s gross domestic product and 13% of the nation’s exports, and had 6000 suppliers. Most of its creditors were state-run banks with weak balance sheets that could not afford to have more nonperforming loans on their books. Many business people thought that Daewoo Corporation was so important that it could not be allowed to fail. However, with accumulated debts of $80 billion by 1999, and growing evidence of financial irregularities, it was forced into bankruptcy.