Who or what is the cause of the crisis faced by the organization?
DSME also faces the crises that affect the company a lot financially that led the company to the failure stage and to liquidate its position. The first crisis that led the company’s corporate clients to abandon DSME was the violation of the union that was instituted in the year 1987.
The second crises that led the company to liquidate its assets for its survival was due to the fact that, in the year 1997 the Asian market melted down it was due to the reason of the credit crunch that held in the Thailand. From this crisis, DSME was affected the most and it was because of the reason that foreign currency debts was shorted to pay off the short term debts for paying off these debts Korea took a loan from the IMF and IMF imposed the de facto on Korea. During that de facto imposition, the Korean currency depreciated against the dollar. DSME was broken into pieces and later on it sold its Daewoo Heavy Industries and Machinery to Doosan Engineering.
What should Daewoo be most worried about and why?
The Daewoo was worried about its technology that would be leaked if it continues outsourcing its manufacturing process to Chinese firms. It is due to the reason that, Chinese firms are looking forwards to enter into the shipbuilding industry and these firms have the state support for the investment purpose.
Furthermore, the Chinese firms are producing the low end ships at lower cost with mass production that would reduce the market share of Daewoo Shipbuilding and Marine Engineering. On the other hand, Chinese firms are seeking to adopt the advance technology that would increase their competitive advantage over DSME.
RECOMMENDED ACTION:
What options would you pursue and why?
To pursue the solution for the problems faced by the DMSE, the company have to understand and evaluate its options such as:
Build more floating docks instead of dry docks: To increase its capacity utilization, Daewoo needs to build more floating dock that would result in increasing the overall production capacity of Daewoo.
Produce value added vessels: To increase their competitive edge, Daewoo must look for improving its product mix through adding value to it. It would be achieved through manufacturing the Liquid Natural Gas –RV and it would also be achieved through providing the customization to its corporate clients.
What is your plan of action?
It would be recommended that, Daewoo Shipbuilding and Marine Engineering must adopt to improve its infrastructure and production capacity through establishing floating docks that would increase the overall capacity and also offer value added vessels such as an LNG - RV...................................
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