Scope
1. Introduction
2. Identifying the main issues
3. Identifying the stakeholders and leaders involved
4. Analyzing the relevant leadership behaviors
5. Possibility of another style, approach and action plan
6. Appraising the applicability of the literature to this real life scenario
7. Summary
1. Introduction
In this essay, I would like to write about Chung Ju Yung who affected the industry of Korea significantly over the last few decades with his leadership. The leadership of Chung Ju Yung has been one of the most successful cases in the industry of Korea.
Chung Ju Yung, well-known founder and chairman of Hyundai, had been both reviled and revered by fellow Koreans. His rags-to-riches story reflected Korea’s national pride and personifies Korea’s phenomenal growth in the postwar period.
Exhibit1 Hyundai Group info.
Chung Ju Yung was born in 1915 as the eldest son of a peasant family in the northern farming village, in what was now North Korea. His education ended at primary school, when he left home as a teenager and made his way to the Seoul area. In Seoul, he was a dock worker in Inchon and a delivery boy at a Japanese rice mill, where he had to spend his first few nights learning
secretly how to ride the delivery bicycle. He eventually scraped together enough capital to start his own rice shop.
The Hyundai group was often hailed in Korea as the prototype of success in the modern Korean business environment. Hyundai was founded by Chung Ju Yung in 1946. It had become the largest conglomerate in South Korea and had been ruled with an iron hand will. Hyundai was a giant manufacture of everything from computer chips to supertanker ships, and was perhaps best acknowledged in the United States for its Excel automobile, which, in 1989, was the fastest-selling import car in history.
The Essay on The Hyundai Group
Like many Korean chaebols, Hyundai was established only recently, in 1947 as a construction company. But by the end of the 1950s, Hyundai Construction grew to become one of the major construction companies in Korea. Then, Hyundai expanded businesses primarily in the construction, heavy industry and automobile manufacturing sectors during the next two decades to become the largest business group in ...
2. Identifying the main issues
The main issues can be defined as various contexts of Korean economy by the time period of Korea because the leadership of Chung Ju Yung has been demonstrated in the time period for a few decades.
In 1946, the year after Korea was liberated from Japan, Chung Ju Yung opened the Hyundai automobile-repair shop in Seoul. Because most cars were owned by the government, Chung regularly made the bureaucratic rounds himself to collect on his bills. With the help of his older brother, Chung In Yung, who spoke English, Chung Ju Yung parlayed his contacts with U.S soldiers into lucrative construction contracts with the U.S military command and later with the South Korean government.
In 1950, when the Korean War broke out, Hyundai’s military contracting business expanded rapidly. When the war ended in early 1953, South Koreans turned their energies toward rebuilding the war-ravaged country. Hyundai won major infrastructure contracts from the government such as the right to build part of the 430 km Seoul-Pusan express way connecting the capital with the nation’s largest port and second-largest city. The project, which was built despite the reservations of the World Bank and other international experts, galvanized economic development after the express way opened in 1970. In a country with few paved roads, the new express way made large-scale internal migration possible; young men and women from the farms streamed to Seoul and Pusan for work in textile mills and factories.
In 1960, Syungman Lee, the president of South Korea, was overthrown, and General Park Chung Hee came to power. Under Park, the South Korean economy began to take off. Chung’s humble background, lack of political pretensions, unwavering confidence in his own judgment, and “rough-and-ready” style, made him a great favorite of President Park Chung Hee during the heroic nation-building decades of the 1960s and 1970s. Notably, in 1960, Korea’s per-capita gross national product amounted to only US$260(US$80 in 1993 prices).
The Term Paper on Korea 2 South Government Economy
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At the end of 1992, it had increased to US$7,345. The real GNP-growth rate averaged 9.5% between 1960 and 1970 and 7.8% between 1971 and 1980. The gross domestic product, GDP, in 1992 was US$290.2million.
Hyundai did not just roads and bridges: Hyundai Motor Company (HMC) built cars, buses, and trucks. Hyundai Steel provided raw materials, such as steel and cement, and built power generation facilities; and Hyundai-built ships carried Korean goods to export markets. Hyundai’s ship construction company won US$7 billion in Middle Eastern contracts during the 1970s, which helped Korea earn back some of the money that it had spent on precious oil and other natural resources, of which Korea had precious little. Hyundai even became one of the most active South Korean firms in Vietnam during the 1960s, when the U.S government showered contracts on South Korean firms in return for President Park’s dispatch of troops to the Vietnam War effort. South Korea sent more than 300,000 troops to Vietnam to aid the U.S military, becoming the second-largest presence in Vietnam after the United States.
American and European conglomerates had also become involved in a wide range of business in Korea, but Hyundai’s diversity went further than most American conglomerates had dared to go. Methodically, that it had expanded. Although the company claimed one view was that Hyundai had responded aggressively to a series of serendipitous opportunities.
3. Identifying the stakeholders and leaders involved
The main stakeholder related with Chung Ju Yung is Korean Government because sound economic planning by the government, the prodigious productivity of the workforce, and strong South Korean leadership had been factors in remarkable economic boom since the Korean War. Of course, the real catalysts in Korea’s economic success had been the efforts of the private business sector, especially those of the chaebols, or large business conglomerates that had come to dominate the Korean economy like Hyundai.
The Term Paper on Korea Korean Christian
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Most Korean chaebols owed much of their success to government supports. A close relationship with the government had almost always been a prerequisite for a chaebols survival and success. The Korean government in the 1960s and 1970s nurtured big business with cheap credit and preferential treatment to help the economy grow rapidly.
The authoritarian Park regime gave the chaebols – who were promising exporters – subsidized loans, tax breaks, and semi monopolies in key industries. Park’s policy succeeded almost too well. By the end of the 1970s, the chaebols’ size was becoming a political liability for the government.
In 1980, reformers rallied around newly installed President Chun Doo Hwan, restructuring heavy industries and forcing firms to swap and consolidate business lines such as cars and heavy machinery.
Nevertheless, the largest of the business groups – such as Hyundai – were more independent from the government than ever. One reason for their new-found autonomy was that the chaebols relied less on financing from the banks than before. The chaebols relative independence from banks made them different from the keiretsu, Japan’s large industrial groups, which often borrowed from banks within their own empires. Another difference was that the Japanese keiretsu were not so tightly linked as chaebols, which were owned and operated by founding families.
In 1991, Hyundai implemented plans to become “high-tech”, spending a total of 600 billion won (US$840 million) on R&D, more than double the previous year’s spending. Although reviled and reprimanded for much of the 1980s for being too greedy and powerful, South Korea’s chaebols including Hyundai became stronger than ever.
4. Analyzing the relevant leadership behaviors
At an age when most men had retired, the 78-year-old Chung proclaimed that he planned to work for another 25 years. Rinsing before 5:00 am, the now “honorary chairman” of Korea’s giant business group often started his day by rereading biographies of powerful men who had changed world history. By 6:00 am, he was on the phone to Hyundai branches around the world. His early phone calls were followed by breakfast at home with one or more of his seven sons. He and his sons then walked three miles to Hyundai’s headquarters, arriving there by 7:40 am. His typical day would end 16 hours later.
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Described as possessing an innate business sense coupled with a gambler’s instincts, Chung Ju Yung presented visitors with an air of soft-spoken reticence and informality. Decked out in the company uniform, he could pass for any of the group’s 200,000 employees. Inside Hyundai, however, he had built a reputation as a socially conservative and hard-hitting autocrat and was called “King” by many employees. When Chung gave up smoking, his 200,000 employees were “encouraged” not to light up in the office.
Because Chung was a tough negotiator, labor relations at Hyundai companies were among Korea’s most tumultuous. In April 1990, a walkout at the Hyundai Heavy Industries shipyard in the southeastern city of Ulsan turned so violent that the government dispatched 10,000 police in a combined air, sea, and land operation to quell the disruption. This acting spurted more than 10,000 workers to take to the streets in protest and led to further strikes at Hyundai factories throughout Korea. The workers ultimately won a steep pay increase.
The typical young Hyundai executive (almost exclusively male) wore either a blue or gray soldier-like uniform and keeps his hair trimmed short over the ears Hyundai’s corporate culture was still dominated by Chung. Management frequently stated that the strength of Hyundai lies in the young men who willingly follow their commander in the hope of becoming a latter-day Chung.
The group’s major fields of business were construction and heavy industry, both of which had traditionally required aggressive enterprising attitudes in Korea. Naturally, people who lacked those attitudes were screened out during the hiring interview or later. Once a male applicant was allowed to work at Hyundai, he was immediately trained to acquire the Hyundai spirit through intensive training program, which included physical exercise to build a man’s took-shim, or physical endurance. At his factories, Chung had required for years that workers march in military formation in morning exercises prior to their work shift. Even though many Korean companies incorporated morning exercises into the daily work routine, seldom were their rituals as regimented as Hyundai’s. Despite criticism that Hyundai’s principle of tenacity was often too rigid to react flexibly to the complicated nature of the modern business environment. There was little question that Hyundai’s success was directly attributes to Chung’s style of leadership.
The Term Paper on Chung Ju Yung
Chung Ju-yung 1915–2001 Founder and former chairman of the Hyundai Group Nationality: Korean. Born: November 25, 1915, in Asan-ri, North Korea. Died: March 21, 2001. Family: Son of Chung Bong-sik and Han Seong-sil; married Byun Joong-seok; children: nine. Career: 1931–1934, construction laborer; Bokheung Rice Store, 1934–1935, clerk; Kyongil Grain Company, 1936–1939, founder and manager; A-do ...
Another virtue stressed at Hyundai was frugality. Chung’s frugality was legendary. Despite being named one of the richest men in the world by Fortune Magazine, Chung still lived in an unpretentious home and shuns “luxury” hobbies like playing golf. In an attempt to instill his idea of frugality in his employees, Chung automatically deducted 30 to 40 percent of their salaries from their paychecks and deposited the funds in their savings accounts.
Chung’s recklessness and persuasive powers reflected in the launching of his shipbuilding empire. He had coaxed a shipbuilding order from an overseas customer solely by providing a picture the shipyard’s scheduled construction site. When Hyundai actually started its shipbuilding industry in 1973, it began by constructing the biggest shipyard in the world and then had to set up a shipping line, too, because its first few ships were sent back by dissatisfied customers.
Chung’s lack of a formal education never prevented him from finding solution to daunting problems. One legendary story recounted that the president of his construction company, an engineer with a Ph.D. from the United States, came to Chung unable to cope with waves and strong ocean currents that had halted a landfill project. Earth and rocks dumped into the ocean to interrupt the current were repeatedly washed away. Chung ordered, “Fill an oil tanker with water and place it across the mouth of the bay. That will break the current.” “But the ship may break up!” the construction president protested. “Just do it!” Chung shouted. It was done, and the problem was solved.
5. Possibility of another style, approach and action plan
Hyundai has been faced with many other challenges in terms of its management style and practices. Although Korean chaebols including Hyundai had relied on the unique strategies and styles of their founders to help them manage and grow successfully, they would not be able to continue to count on these factors for their continued success. Many top Korean chaebol executives, trained by Japanese, were now being replaced by new generations educated primarily in the United States. In addition, innovative labor efforts would be required to handle the changing values and attitudes of the labor force. All these trends implied that the older generation’s values of experience, aggressiveness, and intuition would no longer suffice in a dynamic and complex business environment. From these contexts, of course, there are other possibilities of another style, approach, action plan because the contexts of business are always changing, however, as Chung showed through his management style and approach, the way of strong competitive pressure to meet the new challenges for creating the new industry are necessary for many companies including Korean ones.
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6. Appraising the applicability of the literature to this real life scenario
Hyundai and other large chaebols had recently found that their diversification had become a liability. The groups emphasized growth rather than profitability, diversifying into every conceivable industry to increase their size and market share; most ended up with an unwieldy collection of unrelated companies. Some believed that the chaebols’ long-term international competitiveness was threatened by over diversification. Furthermore, chaebols were too large to be managed by members of a single family. Analysts argued that, unless the groups dumped their unproductive assets and invested more in technology development and R&D, they would never be in a position to take on Japanese.
This change in strategy might be easier said than done, however, given the ideas of the chaebol founders such as Chung, who still clung to his empire-building mentality. Restructuring would be painful and expensive. The chaebols would have to tap international capital markets to help pay for the changes and heavy investment in new equipment and technology needed to stay competitive. Strong competitive pressure had already forced groups like Hyundai to meet the new challenges by focusing on productivity drives, automation, and new plants construction in the United States, Europe and Southeast Asia. Hyundai had also begun its move into the manufacture of products that relied more on skill than on low wages, such as aircraft components and sophisticated electronic chips. Hyundai had not altered its traditional aggressive style; although it had no previous experience in electronics, the group plunged into the semiconductor industry in 1991, intending to invest to more than $1 billion in that business over the next five years.
7. Summary
The purpose of this essay is not simply demonstrating Chung’s achievements for Korea, but is reminding that it is necessary for us to learn his leadership. I think that we would be getting lacking of creative challenge for new industry. Of course, there are a lot of cases for improving the existing style and approach ways, however, making something out of nothing like Chung for business is too seldom found in the present. So, we need to learn his strong leadership and to apply to new industry in the various contexts of business.
Hyundai faced the pressing question of leadership succession. Unlike the founders of the other chaebol, Chung had no heir apparent for the entire group. Chung’s retirement from Hyundai had left Hyundai with no clear leader and uncertainty about its future, however, his sons and brothers have been managing Hyundai group successfully from the leadership that he left, especially his oldest son, Chung Mong Koo, the chairman and CEO of HMC (Hyundai Motor Company), has made HMC one of the most prestigious companies in the world.
Exhibit2 HMC info.
References
Information of Chung Ju Yung
http://en.wikipedia.org/wiki/Chung_Ju-yung
“Gale Encyclopedia of Biography: Chung Ju Yung”, Answers Corporation, 2012
http://www.answers.com/topic/chung-ju-yung
“Founder and former chairman of the Hyundai Group”, Advameg, Inc. 2012
http://www.referenceforbusiness.com/biography/A-E/Chung-Ju-yung-1915-2001.html
“Chung Ju Yung”, Telegraph Media Group Limited 22 Mar 2001
http://www.telegraph.co.uk/news/obituaries/1327384/Chung-Ju-yung.html
Robert Neff and Laxmi Nakarmi, “HOW CHUNG JU-YUNG IS TRYING TO REUNITE KOREA”, Business week, 13 May 1991
http://www.businessweek.com/archives/1991/b321371.arc.htm
By Richard M. Steers “Made in Korea: Chung Ju Yung and the rise of Hyundai”, 4 Feb 1999
http://books.google.co.uk/books?hl=ko&lr=&id=UecUDMPIUIUC&oi=fnd&pg=PR9&dq=chung+ju+yung&ots=_w4numSybI&sig=pnw_2LlarPylYrARz3NTKS0SSVM#v=onepage&q=chung%20ju%20yung&f=false
By Donald Kirk “Korean Dynasty: Hyundai and Chung Ju Yung”, 31 Dec 1994
http://books.google.co.uk/books?hl=ko&lr=&id=FpmB0ymrBS8C&oi=fnd&pg=PP17&dq=chung+ju+yung&ots=KTpIVTiv2L&sig=ZarhXXZcYNUJCQnMO-JKGg-OoUo#v=onepage&q=chung%20ju%20yung&f=false
Information of Hyundai group, Exhibit1
http://en.wikipedia.org/wiki/Hyundai
Information of Hyundai Motor Company, Exhibit2
http://en.wikipedia.org/wiki/Hyundai_Motor_Company
Information of Korean Chaebols
From: Louis Kraar “THE TIGERS BEHIND KOREA’S PROWESS”, Fortune, November 13, 1989
http://money.cnn.com/magazines/fortune/fortune_archive/1989/11/13/72748/index.htm
By Richard M. Steers “Made in Korea: Chung Ju Yung and the rise of Hyundai”, 4 Feb 1999
http://books.google.co.uk/books?hl=ko&lr=&id=UecUDMPIUIUC&oi=fnd&pg=PR9&dq=chung+ju+yung&ots=_w4numSybI&sig=pnw_2LlarPylYrARz3NTKS0SSVM#v=onepage&q=chung%20ju%20yung&f=false
By Donald Kirk “Korean Dynasty: Hyundai and Chung Ju Yung”, 31 Dec 1994
http://books.google.co.uk/books?hl=ko&lr=&id=FpmB0ymrBS8C&oi=fnd&pg=PP17&dq=chung+ju+yung&ots=KTpIVTiv2L&sig=ZarhXXZcYNUJCQnMO-JKGg-OoUo#v=onepage&q=chung%20ju%20yung&f=false
