HETBAHN Case Technology Management and Strategy. HETBAHN Case Presented by Kihoon Kim, Toikye Cho, Younghwan Jeon.

HETBAHN Case Technology Management and Strategy

HETBAHN Case Presented by Kihoon Kim, Toikye Cho, Younghwan Jeon

HETBAHN Case

PART Ⅰ PART Ⅱ PART Ⅲ

HETBAHN Case PART I PART Ⅰ PART Ⅱ PART Ⅲ

Introduction 1.Company Overview 2.Industry Overview 3.Product Overview

Introduction “CJ creates a Healthy, Happy and Convenient Lifestyle” Vision To become a Global Enterprise that Creates a Healthy, Happy and Convenient Lifestyle Mission To Create Premium Value for Customers, Shareholders and Employees by Supplying the Best Products and Services through the "Only One" Spirit 1. Company Overview *Vision & Mission

Introduction CJ’s business areas include food, bio, processed food, animal feed, pharmaceuticals and entertainment Food Logistics Entertainment IT Infrastructure Bio Technology 1. Company Overview *Business Area

Introduction CJ’s is one of the biggest companies in food industry in Korea 1. Company Overview *Business Performance (April, 2010)

Introduction 1. Company Overview *History before HETBAHN (1953~) 1953~1970 Foundation and Take off 1973~1980 Growing into Composite Food Company 1980~1990 Advanced Technology Development and Overseas Market Entry 1991~1995 Diversifying Independent Business Fields Launching Life and Culture Group 1996~

Introduction 1. Company Overview *History before HETBAHN (1953~1997) 1953. 8. Founded Cheil Jedang Co., Ltd. (the first manufacturing business of Samsung Group) 11. Commenced sugar manufacturing (first sugar- producing facility of Korea) 1973. 11. Commenced animal feed manufacturing 1975. 11. Commenced production of ‘Dashida’ 1987. 2. Founded Cheil Frozen Food 1991. 11. Commenced life science business 1994. 2. Entered food service business 1996. 2. Established CGV, the multiplex theater 1997.4. Completed official and legal separation from Samsung Group 1997.12.

Introduction 1. Company Overview *History before HETBAHN (1953~1997) 1953. 8. Founded Cheil Jedang Co., Ltd. (the first manufacturing business of Samsung Group) 11. Commenced sugar manufacturing (first sugar- producing facility of Korea) 1973. 11. Commenced animal feed manufacturing 1975. 11. Commenced production of ‘Dashida’ 1987. 2. Founded Cheil Frozen Food 1991. 11. Commenced life science business 1994. 2. Entered food service business 1996. 2. Established CGV, the multiplex theater 1997.4. Completed official and legal separation from Samsung Group 1997.12. HETBAHN selected as hit product in the field of ready-to-eat processed foods at the Korea Consumer Festival 1997 CJ General Research Center won a prize of 1st Technology Research Center Award from the Ministry of Science and Technology for outstanding research performance

Introduction Food businesses gave constant effort to develop ready-to-eat processed rice product to meet the market taste The market was attracting businesses with great potential demand Frozen Rice (1993~) Food businesses adopted frozen fried-rice, frozen rice-ball manufacturing facilities from Japan Market penetration was unsuccessful due to bad taste 2. Industry Overview *Ready-to-eat Processed Rice Retort Rice (1995~) Market penetration was unsuccessful due to bad taste

Introduction Food businesses gave constant effort to develop ready-to-eat processed rice product to meet the market taste The market was attracting businesses with great potential demand Frozen Rice (1993~) Food businesses adopted frozen fried-rice, frozen rice-ball manufacturing facilities from Japan Market penetration was unsuccessful due to bad taste 2. Industry Overview *Ready-to-eat Processed Rice Retort Rice (1995~) Market penetration was unsuccessful due to bad taste Aseptic Rice (1997~) Aseptic packaged rice introduced to the market by CJ

Introduction HETBAHN had bean launched in 1996 and became a bestselling ready-to-eat processed food in 1997 3. Product Overview *Brief History of HETBAHN 1996. 12. CJ developed Aseptic Packaging System and launched brand new aseptic packaged ready-to-eat processed rice, HETBAHN. 1997. 7. CJ supplied HETBAHN to KOREANAIR. HETBAHN began to be served as airline food. 1997. 12. HETBAHN recognized as the best-hit- product from 12 newspapers.

Motivation of Innovation 1.Demographic Changes 2.New Knowledge

Motivation of Innovation 1. Demographic Changes 2. New Knowledge *”The Discipline of Innovation”, HBR, Peter F. Drucker (Unexpected Occurrence, Incongruities, Process Needs, Industry & Market Change, Demographic Change, Changes in Perception, New Knowledge) Structure of food market had been changed as  the number of nuclear family increased  the number of double-income family increased Life style / Eating habits had been changed The new structure of food market had created massive opportunities for ready-to-eat processed food providers CJ developed new technology “Aseptic Packaging System” (Details follow) New Knowledge of Aseptic Packaging System brought Changes in Perception of ready-to- eat food product (Details follow)

68% of households owned at least one microwave in 1996. Microwave became a one of the most popular equipment. Motivation of Innovation 1. Demographic Changes(cont.) 5-day-work-week Increasing female employment Microwave 5-day-work-week changed the life style of the customers. Customers started to enjoy sports and leisure activities on weekends. The number of female employment kept increasing. Females’ role changed from housewife to career women. 1980198519901997 (x10,000) 68% 32% (Number of female employment) (Proportion of microwave ownership) The changes implies that the customers’ potential demand for convenient food increased significantly. Statistics Korea

Technology Management 1.Key Success Factors 2.Aseptic Packaging System (Core Technology of HETBAHN)

Technology Management Both Brand Image and R&D are KSFs for CJ’s ready-to-eat rice product 1. Key Success Factors Customer-Driven Knowledge-Driven  Brands or Customer Relations are relatively important  R&D is relatively important Capacity-Driven  Physical capital is relatively important *KSFs for ready-to-eat rice product

Technology Management Both Brand Image and R&D are KSFs for CJ’s ready-to-eat rice product 1. Key Success Factors Customer-Driven Knowledge-Driven  Brands or Customer Relations are relatively important  R&D is relatively important  Food products industry is Customer-Driven Industry in general  The taste of ready-to-eat rice must be upgraded through New Knowledge to meet the mass market Capacity-Driven  Physical capital is relatively important *KSFs for ready-to-eat rice product

Technology Management 2. Aseptic Packaging System (Core Technology of HETBAHN) Potential customer demand for Ready-to-Eat Rice Frozen Rice and Retort Rice could meet only small portion of the enormous demand because of BAD TASTE CJ could meet the massive market with the new product which provides outstanding taste Aseptic Packaged Ready-to-Eat Rice which tastes just like home-made rice

Technology Management 2. Aseptic Packaging System (Core Technology of HETBAHN) *Innovative Packaging Process: Aseptic Packaging

Technology Management 2. Aseptic Packaging System (Core Technology of HETBAHN) *Innovative Packaging Process: Aseptic Packaging 1. Clean Room *HETBAHN factory is managed as clean as semiconductor factories *Number of particles of dust: 100/ft^2 (Normally there exist 20,000 particles of dust/ft^2 in the air) 2. Inspection *3-hour-cleaning must be conducted everyday *If any problem occurs: All the processes must be stop immediately until the problem gets identified and removed 3. UV Sterilization *All the packages must be sterilized with UV

1. Clean Room *HETBAHN factory is managed as clean as semiconductor factories *Number of particles of dust: 100/ft^2 (Normally there exist 20,000 particles of dust/ft^2 in the air) Technology Management 2. Aseptic Packaging System (Core Technology of HETBAHN) *Innovative Packaging Process: Aseptic Packaging 2. Inspection *3-hour-cleaning must be conducted everyday *If any problem occurs: All the processes must be stop immediately until the problem gets identified and removed 3. UV Sterilization *All the packages must be sterilized with UV 4. Vacuum-packing *Packaged rice gets cooled in cold water for 15minutes *No preservative is needed because the rice is vacuum-packed

Technology Management 2. Aseptic Packaging System (Core Technology of HETBAHN) No Preservative No Extreme Heating No Freezing No Dehydration HETBAHN can be stored in room temperature for 6 month, doesn’t have to be kept in freezer, and delivers the Great Taste just like home-made rice! *Innovative Packaging Process: Aseptic Packaging

Technology Management Aseptic Packaging System provides outstanding taste 2. Aseptic Packaging System (Core Technology of HETBAHN) Frozen Rice Retort Rice Aseptic Rice

Technology Management Aseptic Packaging System provides outstanding taste 2. Aseptic Packaging System (Core Technology of HETBAHN) * Freeze cooked rice from 40 ℃ to below 0 ℃ *Can be stored for an year in a freezer * Heat cooked rice to over 100 ℃ for sterilization *Can be stored in room temperature for an year * Seal the cooked like in room temperature Can be stored in room temperature for 6 months Frozen Rice Retort Rice Aseptic Rice

Technology Management Aseptic Packaging System provides outstanding taste 2. Aseptic Packaging System (Core Technology of HETBAHN) * Freeze cooked rice from 40 ℃ to below 0 ℃ *Can be stored for an year in a freezer * Heat cooked rice to over 100 ℃ for sterilization *Can be stored in room temperature for an year * Seal the cooked rice in room temperature Can be stored in room temperature for 6 months Frozen Rice Retort Rice Aseptic Rice

Timing of Entry 1.First-Mover Disadvantages 2.Overcoming Disadvantages 3.First-Mover Advantages

Timing of Entry CJ was the first mover of the Aseptic Packaged Ready-to-Eat Rice market and had to face first-mover disadvantages 1. First-Mover Disadvantages Uncertainty of Customer Requirements Uncertainty of Customer Requirements High Development Expenses

Timing of Entry CJ was the first mover of the Aseptic Packaged Ready-to-Eat Rice market and had to face first-mover disadvantages 1. First-Mover Disadvantages Uncertainty of Customer Requirements Uncertainty of Customer Requirements High Development Expenses  Previous Ready-to-Eat Rice products failed to penetrate the market due to the bad taste.  The failure of the frozen rice and retort rice established negative customer perception of Ready-to-Eat rice product.  Previous Ready-to-Eat Rice products failed to penetrate the market due to the bad taste.  The failure of the frozen rice and retort rice established negative customer perception of Ready-to-Eat rice product.  Aseptic Packaging System required huge amount of initial cost for establishing the facility.  The new process required high cost of maintenance for keeping the cleanness.  R&D for Aseptic Packaging system took 2 years  Aseptic Packaging System required huge amount of initial cost for establishing the facility.  The new process required high cost of maintenance for keeping the cleanness.  R&D for Aseptic Packaging system took 2 years

Timing of Entry 2. Overcoming Disadvantages ProductPrice PromotePlace *Marketing 4P CJ overcame first-mover disadvantages through Marketing 4P Outstanding taste Convenient storage TV advertisements Offering free samples Competitive price (1050won) compare to a bowl of rice served in restaurants (around 1000won) Concentrated displays in convenience stores in urban area

Timing of Entry 3. First-Mover Advantages Brand Loyalty Reaping Increasing Returns Reaping Increasing Returns CJ was the first mover of the Aseptic Packaged Ready-to-Eat Rice market and enjoyed the first-mover advantages

Timing of Entry 3. First-Mover Advantages Brand Loyalty Reaping Increasing Returns Reaping Increasing Returns  Achieved 91% brand awareness in only 1 year from the launching  “HETBAHN” became a BYWORD for ready-to-eat rice  Achieved 91% brand awareness in only 1 year from the launching  “HETBAHN” became a BYWORD for ready-to-eat rice  Attained 15,000,000,000won annual revenue in 3 years from the launching 91% 9% HETBAHN report, 2000 SERI, 2005 CJ was the first mover of the Aseptic Packaged Ready-to-Eat Rice market and enjoyed the first-mover advantages (Brand awareness: Ready-to-eat rice) (Market sales of HETBAHN)

Types of Innovation 1.Types of Innovation

Types of Innovation Convenience Taste *Product & Process Innovation PRODUCT CJ produced new product which could bring outstanding taste to the customers PROCESS CJ implemented new process which could produce ready-to- eat rice in room temperature HETBAHN: Product Innovation & Process Innovation

Types of Innovation *Radical & Competence Destroying Innovation RADICAL HETBAHN was the first product which was manufactured through aseptic packaging system HETBAHN: Radical Innovation & Competence Destroying Innovation COMPETENCE DESTROYING Aseptic packaging system made previous CJ’s ready-to-eat rice packaging system obsolete. It was entirely new technology.

Stakeholder Model 1.Stakeholder Analysis

Stakeholder Model 1. Stakeholder Analysis Stakeholders who are better off with HETBAN: Stockholders, Suppliers, Government, Customers *Benefits of HETBAHN

Stakeholder Model 1. Stakeholder Analysis Stockholders (More Earning per Share) Suppliers (Increasing Demand) Government (Reducing Cost of Government- stock rice) Customers (Tasty Ready-to- Eat Rice) Stakeholders who are better off with HETBAN: Stockholders, Suppliers, Government, Customers *Benefits of HETBAHN

HETBAHN Case PART II PART Ⅰ PART Ⅱ PART Ⅲ

Analysis of Technology Diffusion 1.Market Growth & Brand Image 2.Technology S-Curve

Analysis of Technology Diffusion Market sales of HETBAHN increased consistently with high growth rate The brand image of HETBHAN was the best in the market Market Sales of CJ HETBHAN - 2005 seri, CJ Perceived Brand Image Rate The sales increased 30 ~ 40% every year Brand image of CJ HETBHAN was overwhelming - 2005 seri, CJ 1. Market Growth & Brand Image *HOWEVER!(cont.)

Analysis of Technology Diffusion The market of aseptic packaged rice became saturated Sales of Aseptic Packaged Rice Market - CJ survey 0 200 400 600 800 1000 1200 1400 19971999200120032005 S-curve of diffusion 1. Adoption is initially slow because the product is unfamiliar 2. Adoption accelerates as the product becomes well understood 3. Eventually market is saturated and the rate of new adoptions declines 2. Technology S-Curve The market growth rate DECREASED

Analysis of Technology Diffusion The market share of HETBHAN constantly decreased The market share of HETBAHN DECREASED Market Share in Aseptic Packaged Rice - 2005 YTN news- CJ survey 0 200 400 600 800 1000 1200 1400 19971999200120032005 S-curve of diffusion 2. Technology S-Curve Sales of Aseptic Packaged Rice Market The market growth rate DECREASED

Analysis of Technology Diffusion CJ had to deal with the threat of competitors and decreasing market growth rate Entering The product Becomes perceived Growing Power of brand image becomes strong Saturation The growth of market’ almost finish time 2. Technology S-Curve

Analysis of Technology Diffusion CJ had to deal with the threat of competitors and decreasing market growth rate Market growth rate decreased Entering The product Becomes perceived Growing Power of brand image becomes strong Saturation The growth of market’ almost finish time Threat of competitors 2. Technology S-Curve *Threat of competitors *Decreasing market growth rate ?

Implemented Strategies 1.Protecting Innovation 2.Changing the Rule of Competition 3.Individualized Strategies for Competitors

CJ protected the right to use the name, “HETBHAN” Patents registered: Korean Intellectual Property Office “HETBHAN” became a BYWORD for aseptic processed rice The name, “HETBHAN”, distinguished the product from the others Implemented Strategies 1. Protecting Innovation *Trade Mark

CJ protected the right to use the name, “HETBHAN” Patents registered: Korean Intellectual Property Office “HETBHAN” became a BYWORD for aseptic processed rice The name, “HETBHAN”, distinguished the product from the others PATENT Patents registered in KIPO CJ registered 16 patents to protect the name “HETBHAN” Implemented Strategies 1. Protecting Innovation *Trade Mark TRADE MARK

TASTE - As the technology of “Aseptic processed rice” spread out, the taste of competitors ready-to-eat rice became almost the same BRAND IMAGE - Consumers bought HETBAHN based on brand image at the first. However, the brand image slowly became less influential. Previous rule of competition Implemented Strategies 2. Changing the Rule of Competition

TASTE - As the technology of “Aseptic processed rice” spread out, the taste of competitors ready-to-eat rice became almost the same BRAND IMAGE - Consumers bought HETBAHN based on brand image at the first. However, the brand image slowly became less influential. VARIETY in CUSTOMER OPTION - CJ expanded the product line and started to provide derivative products of HETBAHN Previous rule of competition New rule of competition To survive in the fierce competition, CJ changed the rule of competition ! Implemented Strategies 2. Changing the Rule of Competition

By providing variety in customer option, CJ tried to capture more customers Different sizeRice soupRice with sauceRice with soup People who eat more or less than 200g People who want to eat rice soup 10s and 20s30s and 40s 200g is too much or too small For breakfastFor lunch or dinnerFor breakfast or dinner 880~1880 won target situation price 2430 won 2540 won Implemented Strategies 2. Changing the Rule of Competition

CJ tried to expand the market of ready-to-eat rice - CJ survey (N=211) When does customer want ready-to-eat rice? How often does customer buy ready-to-eat rice? - CJ survey (N=211) Implemented Strategies 2. Changing the Rule of Competition provide VARIETY in CUSTOMER OPTION

The individualized strategies implemented to deal with the threats Threat 1 NONGSIM`s low price products Threat 2 DONWON F&B`s High quality rice Provide low-price-package of HETBAHN Alliance with Joennam rice association Implemented Strategies 3. Individualized Strategies for Competitors

Analysis of the company 1.SWOT analysis 2.Five forces analysis 3.Value Chain analysis 4.BCG analysis

SWOT Strength Weakness Threats Opportunities Analysis of the Company 1. SWOT Analysis

SWOT Strength Weakness Threats Opportunities Accumulated knowledge & knowhow Powerful brand image Rice is essential food Price of rice varies Negative perception of instant food Analysis of the Company 1. SWOT Analysis

SWOT Strength Weakness Threats Opportunities Accumulated knowledge & knowhow Powerful brand image Rice is essential food Price of rice varies Negative perception of instant food Microwave is available everywhere Increasing female employment Modern life style: too busy to cook Increasing export Competitors Economic recession Regulations (Plastic Package) Analysis of the Company 1. SWOT Analysis

2. Five Forces Analysis Existing Rivalry Potential Entrance Threats of substitutes Bargaining power of suppliers Bargaining power of buyers High Low Analysis of the Company

2. Five Forces Analysis Existing Rivalry Many companies were already involved in the market of “aseptic processed rice” Potential Entrance Korean food companies Foreign companies Threats of substitutes Bargaining power of suppliers Bargaining power of buyers Fast foods(such as hamburger, sandwich, kimbab, instant noodle etc) High Low Analysis of the Company

2. Five Forces Analysis Existing Rivalry Many companies were already involved in the market of “aseptic processed rice” Potential Entrance Korean food companies Foreign companies Threats of substitutes Bargaining power of suppliers Bargaining power of buyers Plenty of farms were available for supply Fast foods(such as hamburger, sandwich, kimbab, instant noodle etc) CJ already had good brand image and customer royalty High Low Analysis of the Company

3. Value Chain Analysis Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service advantage competitve Support Activities Primary Activities Analysis of the Company

3. Value Chain Analysis Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service advantage competitve Support Activities Primary Activities Procurement, technological development and marketing & sales mostly contributed for the HETBHAN`S competitive advantage Analysis of the Company

3. Value Chain Analysis Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service advantage competitve Support Activities Primary Activities  Technological development - The “Aseptic packaging” technology made the product delicious Marketing & Sales - The active marketing strategy increased the sales and raised the brand image Primary activities  Procurement -The self rice-polishing facility of CJ improved the quality of HETBHAN. Support activities Procurement, technological development and marketing & sales mostly contributed for the HETBHAN`S competitive advantage Analysis of the Company

The aseptic technology improved the taste of ready-to-eat rice radically The multi-layer technology extended the expiration date significantly 3. Value Chain Analysis – Technological Development Aseptic packaging technology Multi-layer plastic package technology Analysis of the Company

Various marketing activities enhanced the brand image and increased the sales 3. Value Chain Analysis – Marketing & Sales Online EventOff Line Event TV Advertisement Analysis of the Company

The procurement system of CJ contributed for outstanding taste of HETBHAN 3. Value Chain Analysis - Procurement - 2008.03.17 아시아 경제 Analysis of the Company

The procurement system of CJ contributed for outstanding taste of HETBHAN 3. Value Chain Analysis - Procurement The taste of rice starts to go bad right after get polished - 2008.03.17 아시아 경제 CJ was the only one (ready-to-eat rice manufacturing) company in Korea which had a self polishing system to polish raw rice. CJ could use fresh rice to manufacture HETBAHN. Analysis of the Company

StarQuestion Mark Cash Cow Dog High Low Market Growth High Middle Low Market Share Position of HETBAHN on BCG Matrix: Star NONGSIM HAPSSALBAB OTTUGI DELICIOUS RICE DONGWON SANCOOK 4. BCG Analysis Analysis of the Company

StarQuestion Mark Cash Cow Dog High Low Market Growth High Middle Low Market Share Position of HETBAHN on BCG Matrix: Star NONGSIM HAPSSALBAB OTTUGI DELICIOUS RICE DONGWON SANCOOK 4. BCG Analysis It had largest market share and its market had great potential to grow HETBHAN Analysis of the Company

HETBAHN Case PART III PART Ⅰ PART Ⅱ PART Ⅲ

Suggestion 1.Five Forces Analysis 2.SWOT Analysis 3.TOWS Analysis 4.3-Phase Future Strategy 5.Balanced Scorecard

Suggestion External Analysis 1. Five Force Analysis Existing Rivalry Potential Entrance Bargaining power of suppliers Threats of substitutes Bargaining power of buyers Porter’s Five Force model: 2010

Suggestion External Analysis 1. Five Force Analysis Existing Rivalry Lot of competitors are competing in the saturated market Lot of competitors are competing in the saturated market Potential Entrance Entrance barrier is high because HATBAHN still has very strong brand image Bargaining power of suppliers Threats of substitutes Triangle gimbab Fast food Triangle gimbab Fast food Bargaining power of buyers Porter’s Five Force model: 2010

Suggestion External Analysis 1. Five Force Analysis Existing Rivalry Lot of competitors are competing in the saturated market Lot of competitors are competing in the saturated market Potential Entrance Entrance barrier is high because HATBAHN still has very strong brand image Bargaining power of suppliers Power of suppliers became stronger due to the increased number of competitors producing ready-to-eat rice product Threats of substitutes Triangle gimbab Fast food Triangle gimbab Fast food Bargaining power of buyers Power of buyers became stronger due to the increased number of ready- to-eat rice products. Porter’s Five Force model: 2010

Suggestion External Analysis 1. Five Force Analysis Existing Rivalry Lot of competitors are competing in the saturated market Lot of competitors are competing in the saturated market Potential Entrance Entrance barrier is high because HATBAHN still has very strong brand image Bargaining power of suppliers Power of suppliers became stronger due to the increased number of competitors producing ready-to-eat rice product Threats of substitutes Triangle gimbab Fast food Triangle gimbab Fast food Bargaining power of buyers Power of buyers became stronger due to the increased number of ready- to-eat rice products. Porter’s Five Force model: 2010 High Middle Low Degree

Suggestion 2. SWOT Analysis Internal Analysis SWOT Analysis: 2010

Suggestion Powerful brand image Diversified distribution channel First mover advantages Both B2B sales and B2C sales Expensive price Negative perspective for instant food 2. SWOT Analysis Internal Analysis SWOT Analysis: 2010

Suggestion Powerful brand image Diversified distribution channel First mover advantages Both B2B sales and B2C sales Expensive price Negative perspective for instant food Overseas demand Increasing employment rate of women Decreasing brand power Increasing bargaining power of suppliers and buyers 2. SWOT Analysis Internal Analysis SWOT Analysis: 2010

Suggestion Suggested Strategies 3. TOWS Analysis TOWS Analysis: 2010 TOWS S-O (Offensive) (Risk Aversion) S-T (Turn-around) W-TW-O (Defensive)

Suggestion Suggested Strategies 3. TOWS Analysis TOWS Analysis: 2010 TOWS S-O (Offensive) (Risk Aversion) S-T (Turn-around) W-TW-O (Defensive) Penetrate Chinese market with “Korea #1” brand image Contact actively with many institutes and companies to increase B2B sales Diversify the product distribution channel Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors

Suggestion Suggested Strategies 3. TOWS Analysis TOWS Analysis: 2010 TOWS S-O (Offensive) (Risk Aversion) S-T (Turn-around) W-TW-O (Defensive) Penetrate Chinese market with “Korea #1” brand image Contact actively with many institutes and companies to increase B2B sales Diversify the product distribution channel Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors Providing various types of products: Glocalization for overseas market Strategic collaboration with substitutes such as” Triangular gimbab with HETBAHN” Conduct promotion to reduce negative perception of instant food

Suggestion Suggested Strategies Priorities we give priorities to the strategies in TOWS analysis 3. TOWS Analysis TOWS S-O (Offensive) (Risk Aversion) S-T (Turn-around) W-TW-O (Defensive) Penetrate Chinese market with “Korea #1” brand image Contact actively with many institutes and companies to increase B2B sales Diversify the product distribution channel Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors Providing various types of products: Glocalization for overseas market Strategic collaboration with substitutes such as” Triangular gimbab with HETBAHN” Conduct promotion to reduce negative perception of instant food

Suggestion Suggested Strategies Priorities we give priorities to the strategies in TOWS analysis 3. TOWS Analysis TOWS S-O (Offensive) (Risk Aversion) S-T (Turn-around) W-TW-O (Defensive) Penetrate Chinese market with “Korea #1” brand image Contact actively with many institutes and companies to increase B2B sales Diversify the product distribution channel Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors Providing various types of products: Glocalization for overseas market Strategic collaboration with substitutes such as” Triangular gimbab with HETBAHN” Conduct promotion to reduce negative perception of instant food #1 #2 #3

Suggestion Future Strategy: Glocalization Overseas market has great potential: China, Japan, India etc. 3. TOWS Analysis Future Strategy

Suggestion Future Strategy: Glocalization Future Strategy 3. TOWS Analysis CJ should become glocalized and provide localized products to global customers For glocalization, decentralized R&D will be helpful for better performance. Decentralized R&D can better understand local consumers’ needs and culture.

Suggestion For glocalization, decentralized R&D will be helpful for better performance. Decentralized R&D can better understand local consumers’ needs and culture. 3. TOWS Analysis CJ should become glocalized and provide localized products to global customers Future Strategy Future Strategy: Glocalization

Suggestion 4. 3-Phase Future Strategy Phase 1: Crisis management Financial Stability Decentralized R&D for new product and focus on glocalization Contact actively with many institutes and companies to increase B2B sales Attain price competitiveness through B2B sales strategy

Suggestion Phase 1: Crisis management Phase 2: Brand Management Financial Stability Preparation for a jump Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors 4. 3-Phase Future Strategy Decentralized R&D for new product and focus on glocalization Contact actively with many institutes and companies to increase B2B sales Attain price competitiveness through B2B sales strategy

Suggestion Phase 1: Crisis management Phase 2: Brand ManagementPhase 3: Expansion Strategy Financial Stability Preparation for a jump Leap by using saving power Penetrate Chinese market with “Korea #1” brand image Diversify the product distribution channel 4. 3-Phase Future Strategy Decentralized R&D for new product and focus on glocalization Contact actively with many institutes and companies to increase B2B sales Attain price competitiveness through B2B sales strategy Focus on securing its “high quality and luxurious” brand image through various promotions Strategic collaboration with the competitors

Suggestion Balanced Scorecard How Mission Create premium value by supplying the best products and services Products Customer Service Strategic Collaboration Innovation & Learning 5. Balanced Scorecard

Suggestion Balanced Scorecard 110 Measurements Objectives How Mission Create premium value by supplying the best products and services Products Diversification of product line Diversification of distribution channel Innovative product # of products # of distribution channel # of innovative products Customer Service Create customer loyalty High brand loyalty Customer service Customer Satisfaction rate Brand awareness rate Strategic Collaboration Reduce cost Attain advantages from collaborations Win-win strategy with competitors Annual cost reduction rate # of alliance Innovation & Learning Innovation based on customer demand Industry leading employee satisfaction Superior R&D Employee satisfaction rate Number of new innovations 5. Balanced Scorecard

Reference “Strategic Management of Technological Innovation 3 rd Edition”, Melissa Schilling HBR casestudies for Technology Management, POSMIT Pub, 2010 Food News www.foodnews.co.krwww.foodnews.co.kr CJ cooperation www.cj.netwww.cj.net Hetbahn Homepage www.hetbahn.co.krwww.hetbahn.co.kr Samsung Economic Research Institute www.seri.orgwww.seri.org Statistics Korea www.kostat.go.krwww.kostat.go.kr

EOD THANK YOU

HETBAHN Case Technology Management and Strategy. HETBAHN Case Presented by Kihoon Kim, Toikye Cho, Younghwan Jeon.

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HETBAHN Case Technology Management and Strategy. HETBAHN Case Presented by Kihoon Kim, Toikye Cho, Younghwan Jeon.

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