Corporate Transformation Case Study

Case Title:

Korean Air: Chairman/CEO Yang-Ho Cho's Radical Transformation

Abstract:
A series of fatal accidents, coupled with operational inefficiencies snowballed Korean Air into troubled times. Then, at the beginning of the 21st century, its CEO/Chairman, Yang-Ho Cho undertook various transformation initiatives - for instance, improving service quality and safety standards, technology integration, upgrading pilot training, better business focus; putting in place a professional management team, improving corporate image through sponsorship marketing, etc. He gave a new corporate direction in the form of '10,10,10' goal. However, Korean Air is held up by a slew of challenges. Among which are inefficiencies of - Chaebol system of management, possible clash of its cargo business with its own shipping company, limited focus on the domestic market and growing competition from LCCs. How would Korean Air manage growth as a family-owned conglomerate? The case offers enriching scope for analysing a family business's turnaround strategies, with all the legacy costs involved.

Pedagogical Objectives:

• To discuss the (operational) dynamics of Korean Chaebols - their influence/effects on the country's industrial sector and the economy as a whole
• To analyse how family-owned businesses manage the transition phase - from a supplier-driven economy to a demand-driven economy
• To identify all the possible reasons for Korean Air's turbulent times and assessing whether they are controllable or not
• To critically evaluate Korean Air's transformation efforts - in terms of growth, productivity and cost cuts, especially the efficacy of '10,10,10' goal in a family-run business
• To identify various challenges to Korean Air in sustaining growth and finding ways to overcome them.

Keywords :  Chaebols System; Civil Aviation; South Korea; '10,10,10' Goal; Growth, Productivity and Cost Cuts; Corporate Transformation Case Study; Cross-shareholdings; Clash of Interests in Business Divisions; Hanjin Group; Airfreight; Air Cargo; Corporate Restructuring; Fatal Accidents - Safety Constraints; OECD; SkyTeam Alliance; Family-owned Business Conglomerates; Cargo Shipping

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