Question Details

Operation Management Homework

1. Decide which positions your American expatriate managersshould hold at VT Korea and why those positions would beimportant

Background Information:

Vance Tech

Vance Tech, headquartered in Long Beach, California, hasapproximately 1,600 employees, with 400 working primarily inexecutive and divisional management, marketing, project management,finance and HR at headquarters and the rest working in amanufacturing/distribution facility and a customer service centernear Detroit, Michigan or an R&D center in San Jose,California. Vance Tech was born through the merger of AdvanceSystems and Vanderman Technology Enterprises, both of which werefirms that developed technology for a broad range of applications.Advance Systems had ties to the automobile industry, and asadvanced computer systems, wireless, bluetooth and internettechnology began to emerge as necessities in the auto industry,Vance Tech became specialized in that area, fueled by its ties withmajor American car manufacturers. With 35 years of history, a firmbase in its two large domestic customers, satisfied employees in 3different US cities, and a well-respected management system inplace, Vance Tech was poised for strong growth as it finalized thepurchase of Jaewon New Technologies.

Jaewon New Technologies

Jaewon’s founders Hongjae Kim and Jongwon Lee were both topmanagers at Hyundai Motors before the 1997 economic crash hit EastAsia, taking its deadliest toll in Korea, where unemployment shotupwards of 25% after the country had achieved unmatched economicgrowth for over a decade. Kim and Lee lost their jobs and decidedto take their knowledge and life savings to the Guro TechnologyPark, where they would be welcomed with open arms and tax breaks asentrepreneurs. There the two of them experimented with LCD, GPS andwireless technologies until they landed a license agreement forseveral of their patented technologies with the newly mergedHyundai-Kia Motor Group in 1999. Pressure from Hyundai to keepinnovating and the remarkably speedy recovery of the Korean economyhelped them to grow to 60 employees. In 2009, with US auto salesdown, Jaewon faced some financial trouble, and Kim and Lee sold thefirm to a Japanese firm. The Japanese firm brought in a newmanagement system and 8 Japanese expatriate managers, but thecompany struggled to regain its footing in the industry, losing 30employees. During this time, business with Hyundai fellconsiderably, but new contracts and license agreements with

Nissan and Toyota made up for a portion of the lost revenues. In2014, another Korean tech firm saw the opportunity to do R&Doutsourcing for Korean and Japanese auto manufacturers, so itbought out Jaewon from the Japanese firm and replaced the Japanesemanagers with new Korean management. The employee count was back upto about 50 with business improving very slowly as the firm heldonto loose contracts with 4 car makes in Korea and Japan. A lot ofquestion marks surrounded the sustainability of the firm until aninternational consulting firm brought Vance Tech in fornegotiations, which eventually led to Vance Tech’s acquisition ofJaewon New Technologies.

Developments: VT Korea

In October, 2015, Vance Tech incorporated its new wholly ownedoverseas subsidiary in Seoul as VT Korea. The task now was to turnthis firm into a relevant R&D center that could adapts itsAsian proprietary technologies for Vance Tech’s US customers, aswell as adjust the US technologies for Asian customers. While VanceTech was ready for amazing business results, the firm’s executivemanagement was completely unprepared for the organizationalbehavior challenges the firm would face in integrating itsresources in its new subsidiary. _____________________________

In order to ensure that the new corporate vision and managementsystem were adopted and acted upon effectively at VT Korea, VanceTech HQ decided to send American expatriate managers to Seoul.Believing that the Japanese firm that had previously owned Jaewonprobably overwhelmed the Korean employees by sending in 10 Japanesemanagers, Vance Tech’s CEO decided it would be best to send perhapsjust 5 American managers for temporary assignments until the newsubsidiary is soundly established. Moreover, to ensure that theseAmerican managers were most effective, they would have to knowabout the employees at VT Korea before they arrived.