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Gerencia de Logstica 13-1

Ing. Nancy Mendoza



CASE STUDY - The Aggressive Koreans
It was a hot summer day in June 1986. The senior executives at Bhalerao Industries Ltd. (BIL) were keenly awaiting
the arrival of a delegation from M/s Hyundai Castings Ltd. of South Korea to discuss the supply of huge, high-grade
castings to sugar machinery manufacturers in India. BIL was the main supplier of machined castings of sugar mills
to most of the sugar machinery manufacturers in India and had also received some orders for export to certain
African countries. However, the company consistently faced problems of delayed supply of high-grade castings from
their vendors, besides the usual issues of poor quality and escalation in unit price at frequent intervals. This forced
it to look for a long-term solution wherein they can breathe easy on their continued supply to their valued
customers who were constantly pressurizing the company for maintaining delivery schedules and good quality of
supplies, besides participating in the company's cost reduction programmers by offering to reduce prices in view of
continued business relations. The competition to BIL was also increasing in view of government's incentives to sugar
manufacturers who planned to establish new factories and expand their businesses. The project team at BIL sent
enquiries to a few of the global suppliers of heavy-duty castings and also to certain Indian suppliers of high-grade
heavy-duty castings. The objective of this exercise was to establish once and for all reliable suppliers who could
meet huge castings requirements, which were repetitive and in quantities of nearly a thousand tons per year.
Kishore Dole, the project manager, and R. K. Sood, the materials in-charge, were given the ultimatum by their
managing director, H. D. Parekh, that it is imperative for them to drastically improve the quality of the company's
inputs, mainly the heavy-duty castings that formed nearly 90 per cent of its raw materials. This was particularly
important as BIL was bleeding constantly on account of heavy rejections of its castings and its inability to meet
supply schedules. The threat of losing business to the company's competition was looming large at its doorstep.
This was a do-or-die situation for the project team under Kishore Dole. Hence, the entire team was eagerly looking
forward to having purposeful long-term arrangements with a global supplier who can ensure quality supplies at
reasonable prices and maintain supply schedules.
QUESTIONS
1. What are the special features of the Korean Global Business Model, which make them market
leaders in majority of market segments they have ventured so far?
2. How do you explain the success of Korean products in gaining major market shares across the
world by edging out the might of the Japanese, big General Motors, Fords and Chryslers? Which do
you think are the main reasons for the Korean's resounding global success: marketing capability,
product positioning, technical superiority or government's support in terms of subsidies and
incentives?
3. What type of sustainable business model do you recommend for the other players in the market for
achieving a competitive edge over the aggressive Koreans?