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Posco Case

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Question 4.

We want to give Chairman Chung the advices based on threats we discussed on question 3.

1. We want to suggest him to introduce "SSM (senior shift manager)" system, which complements the shortages raised from "RSM" system. SSM system simply means having one extra senior shift manager, who is responsible for the effective communication between four shift managers and plant superintendent. The reason POSCO first implemented RSM system was to overcome the lack of flow communication due to the differences between each shift manager's production process and capabilities, which results in lack of quality consistency. By having extra personnel who standardizes the production processes, allocates each shift managers capabilities effectively, and arranges all the ideas of each manager before reporting to plant superintendent, POSCO would be able to maintain the quality consistence across shifts. Since SSM system lighten the responsibility and work load which were imposed on just one shift manager in RSM system (by keeping all four managers, dividing the tasks), shift manager's work efficiency would increase and the risk of handling too much stuffs would decrease. This system allows the workers to stay in the fields where they are expertized and motivated, so that they can maximize the capabilities, rather than giving them improvised title and roles.

2. POSCO needs to focus on long-lasting customer relationships by making its position more clearly in competitive market. In global market, POSCO's position was in between Chinese company with low-cost advantages, and Japanese company with high technology. In order to get the most out of POSCO's competitive advantage, which is advanced productivity through innovations rather than price or quality, POSCO needs to further analyze its downstream industry to capture the potential customers. Considering the nature of steel industry, POSCO mostly deals with make-to-order product, where the balance of sufficient customization and distribution flow is important. POSCO's innovated productivity can satisfy its downstream industry, such as car or shipping companies, by providing them with, for instance, more efficient customer-responsive decision making and shorter delivery time. In global steel industry, it is crucial to be very informative to win the contract with customers before other competitors do, and analyzing its potential customer companies and knowing them better would help POSCO to succeed. Another recommendation to POSCO is to entering into partnership or alliance with customers, since it prevents the competitors from stealing potential customers of POSCO in future.

3. There is a lack of cross-utilization due to unequal distribution of innovation. While POSCO focused on innovation of organizational factors, they did not paid enough attention to how to utilize the



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