Case study - Yoon Choi Corporation

Case study 10 :Yoon-Choi Corporation

DEMARQUAY THIBAULT

POLI ALEXANE

FILLON LAURA

Overview

Yoon-Choi Corporation

Korean Corporation

Founded in the 1950s

Machinery, electric, electronic and textile manufacturing

Exports electronic product to the United States

Problem with US market

Has to change its distribution systems

The company

Overview

Woo-Young Jun : International Marketing Director, Yoon-Choi Corporation

Phyllis Stevens : Senior Marketing Analyst, Pembroke Marketing Management associates

Characters

OverviewDates and positions

1950 : Yoon-Choi Company is founded

1960 : Export priority initiative of the gouvernment

1970 : begin of the exportation to

the US

1983 : Yoon-Choi hire a consultant

to study the situation of US

market

Overview

Dialogue between Woo-Young Jun and Phyllis Stevens

Problem: the US market

Cause : “We started Late”

“Only recently did we start our own manufacturing of electronic products”

“The distribution”

Solution proposed by Ms. Stevens: “An attack on all fronts”

Dialogue

Overview

Profit : 625 300 US$

Gross margin: 10.9%

Exhibit 1

Average Per Unit Cost for All Models Black and Car

(in Actual US$) White TVs Radios Stereos

Production costs (including labor and materials)

29.10 11.00 22.96

Overseas transportation and duties 12.20 4.60 10.61Warehousing and distribution 4.23 2.17 3.45

Local salaries (warehouse help and representatives)

9.06 5.23 8.17

Average markup to dealers (11.0%) 6.00 2.53 4.97

Price after average markup 60.59 25.53 50.16

Actual Sales

Total sales (in millions of US$) 2.67 1.81 1.22

Gross profit (in actual US$) 301,040 196,328 127,932

Production and marketing costs for Electronic products in the US (1982)

Overview

Proposed organization : All the retailers, wholesalers and manufactures depend on the Marketing service in the US

T he Korean firm doesn’t sell directly but only with the marketing service of the US

Exhibit 2

Current and proposed Distribution Systems in the US

1971 1972 1973 1974 1975 1976 1977 1978 1979 19800

200

400

600

800

1000

1200

Exports of Electronic products from Korea

Korean Exportation Exportation to US

Overview

Most of electronic products exported from Korean go the the US

The percentage of Korea product in US importation increase continuously

Exhibit 3

Korean Share of Total US Consumer Electronic import

1971 1972 1973 1974 1975 1976 1977 1978 1979 19800

1

2

3

4

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9

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Korea Share in US importation

1971 1972 1973 1974 1975 1976 1977 1978 1979 19800.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Dependency in B&W TVs

Dependency in Color TVs

Depedency in Radios

Overview

The dependency in Color TVs is not important

Whereas US depends on importation for Black and White TVs and Radios is

Exhibit 4

Import dependency of the US Consumer Electronics Market

Overview

Distribution : Specialist marketing subsidiary in the US

Products Continue dual brand policy

Give priority to low-end products

Pricing : Volume oriented strategy

Promotion : more advertisement in journal, for dealers, in media

Intensive utilization of trade fairs

Change Yoon-Choi to an American name

Exhibit 5

Summary of Stevens’ Report

Existing situationCommunication/Advertising

Strengths Weaknesses

Company founded in the 1950s The name « Yoon-Choi » in US

Already knew in US Not many ads at this time

No real allowances for dealers

Communication between Yoo Choi Corporation and dealers in

US

Existing situationMarketing/Pricing


40 percent of its sales are overseas

Lot of competitors

Trading division branch in San Francisco

No marketing subsidiary in the US

Good profits Marketing strategy not clear

US imports the big part of their B&W TV and radios

Not enough marketing channels and import modes

Korean Share in US exportation is growing up

Profit oriented strategy

High-end products

Started late




Lot of competitors



Good profits Marketing strategy not clear





High-end products

Started late


1971 1972 1973 1974 1975 1976 1977 1978 1979 19800.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Dependency in B&W TVs

Dependency in Color TVs

Depedency in Radios

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Lot of competitors



Good profits Started late




High-end products

Existing situationProduction/Distribution


Own manufacture Bad distribution methods in the US

No factory in the US

No TV color


Statement of the problem

How can Yoon-Choi make more profits in the US ?

Solutions

1. Continue without changes

2. Follow Phyllis Stevens point of view

3. Focus on Color TV

4. Merge with an American company

5. Leave the US market share

Solutions 1

Perhaps, in the long term, the disappearance of Yoon-Choi corporation in the U.S.

Our opinion : The company can’t continue without changes because it’s the current strategy and it doesn’t work well enough according to Yoon Choi corporation.

Continue without changes

Advantages

Cost nothing

Keep the company image

No risk

Disadvantages

Failing sales in the US: loss of profit

More competitors

Keep the distribution problem

Solutions 2

Distribution : specialist marketing subsidiary in the US

Products : Continue Dual Brand policy

Low end product

Pricing : volume oriented strategy

More promotion with advertising, etc..

Our opinion : Strategy with lot of changes and risks. But the best way to reorganize the business of the company

Follow Phyllis Stevens point of viewAdvantages

Should get more incomes

More visibility

Reputation in the US market

Drawbacks

Short term solution

Risk with volume oriented strategy ad low-end products

Improve relationship with retailers

Solutions 3

Currently Yoon Choi doesn’t sell color TV.

Sell to an other company the US market division

Our opinion : The company can not be absent in the US market on Color TV, it’s a growing market. But the dependency in the US or Color TV is low.

Focus on Color TV

1971 1972 1973 1974 1975 1976 1977 1978 1979 19800.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Dependency in B&W TVsDependency in Color TVsDepedency in Radios

Advantages

Don’t miss this field

Compete with others brands

Clearer picture : trendy company

Hard to make a name

Drawbacks

No dependency for the US in TV color

Build a new factory

Do research

Long term solution

Solutions 4

Merge with a company specialized in the US market

Depends on the contract of this merge

Our opinion : Could be dangerous, because the is risk is that Yoon-Choi products and brand in the US disappear.

Merge with an American company

Advantages

Can improve the sell

More notoriety

Faster solution

Drawbacks

Risk of disparition of Yoon Choi brand

No more independent

Risk of intercultural differences

Solutions 5

Our opinion : Not recommended because we have to take a part of these exportations. We must not miss this opportunity. If you come back in the future, it’ll too late.

Stop the US market

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The Korea share in US importation is growing up

Advantages

No risk taking

Concentration on Korean market

No distribution cost increase

Drawbacks

Short term solution

Profit loss solutions

Stop the company expansion

Our recommandation

Follow Phyllis Stevens point of view

Merge with an American company

Questions ?

1. Continue without changes

2. Follow Phyllis Stevens point of view

3. Focus on Color TV

4. Merge with an American company

5. Leave the US market share

Case study - Yoon Choi Corporation

Recruiting & HR

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