A Company That Utilized Information to Become One of the Most Sustainable and Profitable Companies in Korea - The Case of Nongshim Corporation -

Abstract

On October 18th, 2001, Mr. Bertrand Pointeau, a managing partner of Bain & Company, presented his research paper on Korean corporations at the 2nd World Knowledge Forum, sponsored by the Maeil Business Newspaper in Korea. This study identified what he called :sustainable profitable growth companies," which fulfill the four criteria of (1) real revenue growth larger than 5.5%, (2) real net profit growth larger than 5.5%, (3) average annual total shareholder return larger than the cost of equity, and (4) annual total sales revenue larger than 1 billion US dollars, all during the period of 1991 through 2000. Mr. Pointeau announced that four companies, namely Samsung Electronics, SK Telecom, Samsung Fire & Marine Insurance, and Nongshim made the cut. Thsi announcement graced the first page of the Maeil Business Newspaper on the following day, and economists and business managers were surprised to find out that a company that produced such a trifling product like ramen, instant fried noodles, was one of the four most successful businesses in Korea.

OBJECTIVES OF THIS PAPER This paper will show how the top managers of Nongshim led their company so successfully to become one of the four most "sustainable profitable growth companies" in Korea. The premise of this paper is that a long-term business success requires the top managers to establish a long-range goal for their company and adopt a long-term method to pursue the goal. This paper calls the long-term method a roundabout approach, and the objective of this study is to examine the contents and elements of the approach, and the drawbacks of the approach.