The Fall of Daewoo Motors


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Case Details:

Case Code : BSTR034
Case Length : 13 Pages
Period : 1990 - 2001
Organization : Daewoo Motors
Pub Date : 2002
Teaching Note : Available
Countries : South Korea
Industry : Automobile & Automotive

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Future

According to analysts, GM's acquisition of Daewoo seemed to be the ideal solution for the latter's problems. An analyst commented, "GM badly needs Daewoo to establish a beachhead in the Asian market.

And without GM, Daewoo will simply collapse." They also opined that GM was the ideal buyer as it had owned a 50% stake in Daewoo till 1992. Moreover, most of Daewoo's vehicle designs were based on GM's. Analysts felt that in the long run, GM could use Daewoo to gain a foothold in Asia. Prior to the acquisition, GM depended solely on its European subsidiary Adam Opel to manufacture small cars for developing countries. As GM's small car was not very successful, it planned to use Daewoo's expertise in developing such cars to tap Asian markets. The company felt that China, India and Thailand, were the key markets for the next 10 years. Alan Perriton (Perriton), who was in charge of GM's business development in Asia, commented that Daewoo's acquisition, "gives us high-quality, low-cost products for the rest of Asia..."

Exhibits

Exhibit I: Assets and Liabilties of Daewoo Group's Twelve Affiliates
Exhibit II: Daewoo Group - CSIA Restructuring Plan
Exhibit III: Daewoo Group - The Prosecutors' Allegations
Exhibit IV: Daewoo Motors' Production Facilities Worldwide

 

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