Review of Nongshim Corporate Model

...

According to an article published on Korea Times by Park Si-soo, Nongshim expanded to a new market in Kenya. Kenya is one of the key markets in Africa and may serve as the future gate to the rest part of the middle Africa.

Management

The article also illustrates how the management was able to make a decision to enter Kenyan market in order to get an even greater benefit from not particularly Kenya but from the opportunities it may grant in the future.

Speaking of management style, it mostly follows the classic suit of Korean chaebols, where decision making goes down from top.

Social capital

Nongshim once launched a TV commercial about ramen in Japan which became a hot issue and caused a great reaction from Japanese people. According to the article, in the video, one of the famous K-Pop singers, member of T-ARA, Jiyeon was showing how-to-it ramen. Even though it was good advertisement, Japanese viewers complained that she was cutting noodles with her mouth and eating directly from the pot. Both actions are considered very rude in Japanese culture.

The company failed to adapt its commercial to a non-Korean market and, therefore, caused a negative reaction among Japanese people. This failure had a direct impact on Nongshim’s social capital as it lost some respect of Japanese consumers.

Capital

In 2012, Nongshim launched its mineral water brand “Baeksansoo” which reputation had been growing and today it is ranked number two in Korean market. According to an article published by Korea Herald, Nongshim decided to invest 200 billion won into project to build bottled water factory that will focus consumers in China.

Such capital management may let Nongshim obtain stronger presence in Chinese market.

Authority

It is culturally laid that those with higher position in Korea possess a greater authority which eventually leads to an unequal power distribution that may, in turn, affect the healthiness of Korean organizational system.

According to an article published by Korea Times, Nongshim abused their bargaining power over hundreds of wholesalers who were given almost unreal goals. In order to meet set by the company sale targets wholesalers were forced to sell products to retailers at the prices lower than at which they purchased them from Nongshim.

The company demonstrated an colossal misuse of its authority and was banned from arbitrarily changing terms with wholesalers by FTC.

Identity and Rationale

As a number one instant noodle producer, I believe, that essentially the company’s rationale is to keep their leading position. According to various news reporters, recently introduced “Jjawang” noodles have definitely enhanced their position as it even overcame the flagship “Shin Ramyun” in sales.

Moreover, new technologies (material logics) enabled Nongshim to manufacture better thick noodles. These technologies allowed boiling thick noodles faster, thus improving their identity of number one instant noodles manufacturer.

References:

Shin, J., 2015. Nongshim Launches New Ramen Product Targeting the Global Market. In: Business Korea. Retrieved from http://www.businesskorea.co.kr/article/8574/new-ramen-nongshim-launches-new-ramen-product-targeting-global-market

Park S-soo (2013) Nongshim makes big bet on Kenya . In: Korea Times. Retrieved from https://www.koreatimes.co.kr/www/news/culture/2015/06/386_146431.html

Park S-soo (2015) Nongshim fined for abusing wholesalers. In: Korea Times. Retrieved from https://www.koreatimes.co.kr/www/news/culture/2015/06/386_146431.html

(2012) T-ARA Jiyeon’s Ramen Commercial, "Rude Meal"? . In: KpopStarz. Retrieved from http://www.kpopstarz.com/articles/7905/20120504/t-ara-jiyeon-ramen-commercial-rude.htm

Moon G-lip (2012) A food empire, built one noodle at a time. In: Korea Joongang Daily. Retrieved from http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=2920835

Nongshim. In: Wikipedia . https://en.wikipedia.org/wiki/nongshim