[Focus] Eight points for corporate management in 2001

Transparent management, e-cost renovations and organizations helpful to market development are essential to enterprises facing difficult business circumstances in 2001 due to expected economic stagnation and expansion of e-business, a private economic think tank said Sunday.

The LG Economic Research Institute predicted that enterprises would have to urgently transform their organizations into profit-oriented ones by making use of new business methods and managing their resources in consideration of the current uncertain circumstances.

The institute made these statements in a report titled ``Eight Matters Local Enterprises Must Attend

to in 2001.¡¯¡¯

¡ãe-cost renovation: Cost reductions in the course of development and making purchases are necessary because demand for information is increasing.

The case of Cisco, which recently lowered its purchase-related expenses to $40 from $140 per case through reform of purchasing procedures, can be cited as a good example.

¡ãTransparent management: Foreign investors use the concept of ``affiliate risk¡¯¡¯ in assessing the creditworthiness of Korean enterprises. Affiliate risk is a concept that arises from the abnormal nature of our businesses, which allow cross investment between affiliates and other ill practices.

The revision of the Commerce Law directly affects management as it invigorates the board of directors, protects the minority shareholders, strengthens shareholders overall. So, the need to secure transparent management following the introduction of a holding company formula is needed.

¡ãIndex of value: A general tendency is that the bigger the uncertainty of circumstances becomes, the greater the importance of resources like manpower.

It is desirable for enterprises facing difficult management circumstances to combine the financial values and intangible non-financial values of their firms and to reflect these figures in the course of making strategic decisions.

¡ãUnified online and offline channels: Actual profit creation in the online market appears to be difficult. So the construction of a unified online and offline channel is expected to emerge as an important task this year.

Successful examples are Seiyu, a Japanese retailer, which receives orders online and handles other business matters by outsourcing to offline firms, and Seven Eleven, a convenience chain, which receives orders through the Internet or by mobile phone and has customers accept the goods at nearby shops.

¡ãCustomer participation in marketing: Customers exercise a decisive influence on enterprises¡¯ decisions as to what goods and services are offered through bilateral communication rather than merely buying given goods.

Marketing techniques that include customers starting from the planning stages will become an important profit factor in the newly emerging management circumstances.

¡ãSurviving in e-business: According to Gartner Group, a computer consulting agency, only 5 percent of about 3,000 B2B marketplaces in the United States are expected to be successful by 2002.

Under these circumstances, what is important is the expansion of c (collaborative)-commerce, meaning profit creation through collaboration between enterprises and knowledge-sharing as well as m(mobile)-commerce following the spread of IMT-2000 service.

¡ãNecessity for management of human resources: One of the goals enterprises have to keep in mind in the course of restructuring is to eliminate the practice of arbitrarily reducing manpower and instead to maintain the principles of fairness and transparency.

Enterprises are required to suggest long-term visions to their employees in the course of restructuring to attach the greatest importance to able people, and to help the remaining employees overcome the so-called ``survivor syndrome¡¯¡¯ like the sense of abandonment and hopelessness they may feel.

¡ãFormation of organizations conducive to market creation: Transforming the enterprise into an organization conducive to market creation through strategic means and stimulating consumerdesire is predicted to be one of the most important tasks during the ongoing downturn.

For the formation of this kind of organization, an ability to see through the potential desire of customers and to offer value and creativity of components are needed. The ``bonafide failure¡¯¡¯of 3M is a test case of the formation of such an atmosphere.