IT in Korea
Analysis: Impact on the Business
The perspective here is on a globally competing firm
which is not a technology business.
As a decision maker of a non-IT company, such as
a candy manufacturer, would you set up a sales office, a regional distribution
center, and a manufacturing center in Korea? (given its IT environment)
If I am working for non-IT related company as a decision
maker, I will not open a sales office and expand it. If the company
manufactures value-added and high-tech items, the company would utilize
Korea's highly developed advanced factors(e.g., highly skilled labor ,
research facilities), and Korean government's incentives for foreign businesses,
such as corporate tax exemption and income tax reduction. However,
the company is simple manufacturing company,as noted above. The reasons
that I will not open a business in Korea are as followings:
Labor cost: Currently, average level of labor
cost in Korea is higher than other developing countries. The level
of labor cost has increased significantly than the past. There are no reason
to spend high labor cost to manufacturing simple item, such candy.
Logistics Information System: Logistic information
system is very important for manufacturing and distribution. Korean
government doesn't provide wholly integrated logistics information system.
Only few systems are now operating separately in four different regions.
Communication Infrastructure: To operating
subsidiaries in a foreign market, telecommunication infrastructure of foreign
countries must be considered. Although some Korean communication
companies provided high-speed network services, users of the service suffer
from heavy traffic on the net, and the service is not reliable. Also,
average cost of high speed network is higher than other advanced countries.
Environmental Protection: Korean government strongly
enforces environmental regulations.
This report was completed in December 1999
for the class
Impacts of National Information Technology
Environments on Business
taught in the program of the MOGIT
(Management of Global Information Technology)
at the
Kogod School of Business at American
University in Washington, D.C.
