Abstract

The case examines the problems faced by South Korea-based Daewoo Motors, the flagship company of the Daewoo Group. Daewoo Motors expanded rapidly in several risky and uncertain markets by taking huge debts. The company offered its products at low prices and with huge discounts, thus further increasing its losses. The case also discusses how financial mismanagement by Daewoo's promoters and the Southeast Asian Financial Crisis in 1997-98 ultimately led to the company's bankruptcy. In early 2000, the South Korean government invited bids for the sale of Daewoo Motors. After two years of negotiations, Daewoo Motors was finally acquired by the US automaker General Motors.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Role of culture, ethics and corporate governance in the survival of large companies.

Keywords

South Korea, Daewoo Motors, Daewoo Group, huge debts, huge discounts, losses, financial mismanagement, Southeast Asian Financial Crisis, bankruptcy,negotiations, General Motors