Review of Nongshim Corporate Model

Nongshim Group

Submitted to:

Prof. Bob W. Graff

By:

Sergey Ten (201200136)

14 August 2015

Company history and overview

Nongshim is a South Korea’s one of the largest food manufacturers that specializes in producing instant noodles and various snacks. Formerly, the company was established under the name “Lotte Industrial Company” on September 18, 1965 by Shin Choon-ho – the younger brother of Lotte Group Chairman Shin Kuk-ho. Later, in March of 1978, the name was changed to Nongshim. The company has led the Korean food industry since it was founded. On February of 1970, Nongshim developed nation’s first instant black bean sauce noodle product. As a pioneer in this field, the company keeps leading position of the instant noodle producer in the present days, even after fifty years since its foundation, with its flagship product “Shinramyun” which is recognizable all over the world. Later, one year after Nongshim introduced their first instant noodles, on December of 1971 the company developed nation’s first snack brand – Shrimp Crackers.

The company had gained wide recognition and occupied the largest share of the local instant noodle market. Due to its achievements, on March of 1985, Nongshim was seleceted as the official instant noodle supplier for the 1986 Asian Games and the 1988 Olympics held in Seoul. After these events, Nongshim gained even wider recognition, not only in Asia but across the whole globe. Thus, the company started widening its boundaries by expanding into new markets and sponsoring various international events, for instance 1998 FIFA World Cup France.

As a company started to grow it had been manufacturing new products besides instant noodles. Nowadays, Nongshim offers a large range of products like instant noodles, snacks, beverages and coffee, instant rice and frozen food.

Moreover, Nongshim has ten subsidiary companies, which are grouped under the name of Nongshim Group and have different functions. For example, Mega Mart is in charge of distribution stores and Youlchon Chemistry deals with packaging.

Overview of the Nongshim’s corporate model

Ownership

It is known that in Korea, all of the largest companies, conglomerates are run by the families and the ownership is usually transferred by inheriting to a younger generation of the family. For example conglomerates like Hyundai, Samsung, CJ Group and many others are all run by the families that possess the greatest power, which barely might be taken away. Nongshim is not an exception and five members of the family hold top positions.

Even though the company became public on June 1976, the family always held the largest share of the company. Recently, the question of transferring ownership arose and the choice fell on two elder sons of Shin Choon-ho. Interesting fact is that these two brothers were twins. However, Dong-won was born 10 minutes earlier his brother Dong-yun.

By transferring control over the company to the eldest son, we can state that Nongshim practices the classic type of ownership of Korean business world.

Networks

As mentioned earlier, the founder of Nongshim is one of the nine siblings of Shin Kyuk-ho, the founder of Lotte Group. The former name of Nongshim was Lotte Industrial Company and their relationship might have an impact on its name.

Moreover, besides that Shin Choon-ho has three sons, he also has two daughters. The eldest, Hyun-joo, is a vice president of Nongshim Communications. The youngest daughter, Yoon-kyung, however, is not involved in the management of Nongshim like her brothers and sister, but she is rather a link to another Korean giant. Yoon-kyung is married to Suh Kyung-bae, the current CEO of Amorepacific. On the personal level, Nongshim has strong networking, which may play a key role in finding solution to the possible interactions between conglomerates in the future.

The globalization of the company always impacts its networks as the company gets into partnership with overseas companies and, thus, gets access to their networks.