woongjin coway water purifier choi, jaehoon lee, hyojung kim, yejin 1
TRANSCRIPT
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Woongjin Coway Water PurifierCHOI, Jaehoon LEE, hyojung Kim, yejin
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0. Index
Problem
Rental Service &
Cody(1997)
Problem
Develop-ment of RO Membrane
(2007)
Strategic Al-liance
Success
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1. Introduction – Company Overview
1989 Establish the company1994 Obtain Clean Mark 1996 Launch air cleaner1998 Start the rental service sys-
tem2000 Launch water-softener and bidet2001 Be listed on KOSPI Category of busi-ness
Manufacturing and Retail
President CEO Hong, jun-gi
Annual Turnover 12,131,000
The Number of Employees 1,746
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1. Introduction – Purifier market in 1990s
1948 1970 19861988 1991… …
The first water purifier in Korea was used in the U.S. army Environmental pollu-
tion caused by the Industrialization Awareness of water problem
Asian Games Seoul Olympic
First appearance of mineral water for for-eigners
Phenol pollu-tion case in Nakdong River
Raising demand in clean water caused by the pol-lution case and improved econ-omy
Water purifier Market has grown since 1990s
<How have water purifier market grown?>
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2-1. Woongjin Coway’s Rental Service
• At 1998 : IMF - Contraction in consumption
Expensive Luxuries!!
• Expensive : Only big company or public
place had the water purifiers
• Not high-technology : There was a distrust
on the functions of the product
• No following-up service : Many complaints
arose from filter problems
<Why water purifier was not popular before 1998?>
Year
Sales
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2-1. Woongjin Coway’s Rental Service
<Why rental service is needed?>• Customer didn’t buy it or couldn’t be satisfied
with itFailed to attract customers
• Then, let the customers rent a clean water purifier(1998. 4. first released).
<What benefits can customers get from the rental service?>
• \1,000,000 \26,000/month + additional ser-vice(CODY service)
Woongjin’s rental water purifier
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2-2. Woongjin Coway’s Cody Service
<What is Cody?>• Cody(Coway-Lady)• Experts of managing the water-purifier• Providing follow-up management
<What do Cody does?>• Carrying out regular inspection and changing the filter at
free• Before Service System
– Filter-replacement time, The time to change component, How to change them
<What benefits can Woongjin get?>• The number of Cody : 13,500(2011)
Deliver the careful image and trust of customers
2001 2004 2006 20110
2000400060008000
10000120001400016000
3500
9000
1200013500
The number of Cody
(Year)
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3. Innovation of RO Membrane
<Why Woongjin innovated their technology?>• The need for pure water is a problem of
global proportions Water treatment has become an area of global concern RO systems have emerged as an effective solution
– Huge quantity of water treatment with less chemicals & smaller space
– But, it was produced only by five foreign fil-ter makers and one domestic company
• Growth rate was under depression in 2006~2008
– Something new to allure customer
The annual number of new cus-tomers
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3. Innovation of RO Membrane
<What did Woongjin succeed?>• Woongjin successfully developed RO membrane(2007)• The 4th largetest RO membrane market share in the world• The durability of the filter was enhanced
– When the pollutant is accumulated, it makes the purification function worse, consequently, the filter should be replaced
<What’s the impact of RO system? >• The development of source tech-
nology for the RO membrane will enable them to save costs by 30%
Save 50billion won an-nually!!
• A base for a future growth in the water treatment industry including desalination, etc
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3. Innovation of RO Membrane
<What is a membrane?>• Selective separation : A separator or filter that allows the selective
removal of a molecule from liquid or gas compound• Major types : microfiltration, ultra-filtration, Reverse
osmosis( depending on permeability, selectivity) • Used as high-molecular materials, ceramic and metal materials.
Reverse osmosis Microfiltration Utrafiltration
Backgrounds
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3. Innovation of RO Membrane
<What is RO membrane?>• 70% of domestic purifiers use the RO membrane method • Through its 0.0001 – micro pores, RO membrane filter is capable of
removing water contaminants such as heavy metals, water-borne microorganisms and other harmful organic chemicals.
• Requires advanced technology;– Very permeable, the salt rejection rate↑– The mechanics; strong enough to endure feed pressure
RO membrane filter in the process of wa-ter filtration
How RO membrane works
Backgrounds
3-1 Types of Innovation
• Product Innovation vs. Process Innovation– RO membrane was totally new type of membrane
• Incremental Innovation vs. Radical Innovation– Woong jin coway kept developing new membrane technology
• Architectural vs. Component– Membrane was a part of the water purifier
• Competence Enhancing vs. Competence Destroying– Because of its superiority, customer do not choose other membranes
but, RO membrane
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4. Strategic Alliance
<Pay Free Service>
Strategic alliance with KEB, hyundai card, lotte card, and SK marketing company.
Cus-tomer
Pay freecard
Card company
Point man-
agementCoway
1.Join
2. Point ac-cumulation
4. Cash5. Rental fee
Rental de-vice
3. Change point to cash
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4. Strategic Alliance
net rental result
117000
264000
2008 2009
termination rate
1.151.09
2008 2009
124.9%↑ about 7300 contracts↓
<Results of pay-free service>
Rental growth
%
%
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• In 2007, the RO membrane was
produced by five foreign filter
makers, including the US-based
Dow Chemical, and one domestic
company Saehan Industries.
- Saehan Industries owned RO
membrane manufacturing
technology for both household
and industrial uses.
4. Strategic Alliance
- Established in 1972 - Producing textiles and environment
substances such as filters and sheets.
• Woongjin wanted to quicken
acquisition of industrial RO
membrane technology and
reduce cost
- The ratio of the materials
of Saehan used in the
Woongjin products was
more than 50%
Woongjin Saehan
<Saehan M&A>
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4. Strategic Alliance
• With the acquisition of Saehan, Woongjin Coway expected- To augment its proprietary filter technologies - To reduce costs through vertical collaboration with substance manufacturer.
• Saehan could secure a steady customer, Woongjin Coway
• In conclusion, Woongjin can get the development of new materials related to textile and environment in order to sharpen competitive edge in original substances.
+ SAEHAN
“Leveraging years-long experiences and technology prowess of Saehan in environmental materials sec-tor, Woongjin Coway expects to gain significant syn-ergy in improving competitive edge”
<Results of Saehan M&A>
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4. Strategic Alliance
• Business diversification through M&A
– Woongjin have its own RO membrane technology
– Woongjin entered water treatment field by merging water treatment
engineering companies(GET in 2010, KC 삼양정수 in 2011)
– Synergy effect : Membrane technology + water treatment engineering
In 2011, Woongjin won a lot of contracts in water treatment
field
(Totally 90 billion
won)
<Water treatment companies M&A>
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5. Success of Woongjin Coway
• Increasing sales revenue – In 1994, sales was 84.8 billion won and kept growing steadily – After introduction of the rental service in 1998, the sales revenue has
been increasing steeply in spite of the IMF crisis
Annual revenue
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5. Success of Woongjin Coway
• The number of rental customers also keep growing– Up to about 5millions totally
Purifier
Air cleanerBidet
Water soft-enerLeftover cleaner
Others
Total
# of total rental customers(unit. 1000)
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5. Success of Woongjin Coway
• Certification & Award
WQA Certified Water Quality Specialist
WQA Gold Seal Mark
Certified Institution Approval, ISO 9001, ISO 14001 Certification
Guiness Book of Records Coway Co., Ltd.
Global Brand Competency Index Num-ber 1
No. 1 in Brand Power
…
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6. Recent Trend of Woongjin Coway
• Diffusion - Woongjin Coway has the high-level filter technology so it can adapt this technology to the many kinds of products which need the filter
• Globalization - Five local subsidiaries in USA, Japan, China, Thailand, Malaysia, Netherland - Export to more than 40 countries
Water Softener Bidet Air puri-fier
Food waste treatment sys-tem
Vacuum cleaner
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7. SWOT
SWOT analysis of
Woong jin coway First mover of cody & rental ser-vice
High market share and brand awareness in domestic market
•Huge amount of investment on R&D
Low brand awareness in global market Some business part have low brand awareness
Export to other countries price advantage com-
pared to japan productVarious consumer segment
Cheap copy and fake products Domestic market in slumpSoaring raw material costs
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7. Five Forces Model
Rivalry among Existing
Firms
-Relatively low brand awareness(global market)-High brand loyalty(domestic)-Many competitors
Threat of Substitutes
Threat of Po-tential en-
trants
- LG Electronics, Chungho nice en-tered water purifier market
Bargaining Power of
Customers
Bargaining Power of Suppliers
- Extreme price sensitivity-Ability to substitute-Low switching cost
-Growth of mineral water market
-Many suppliers-High contribution of materials to the product price
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7. BCG Matrix
Domestic market is growing slowly But global market is increasing es-pecially in ChinaHave 60% of Korean water purifier market share
Woong jincoway
5th com-pany in global market
LG Electronics
Chung ho nice
Woong jin coway
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8. Conclusion
Problem
Rental Service &
Cody(1997)Expensive
Not high-techNo A/S
Service Innovation
Problem
Develop-ment of RO Membrane
(2007)Global market changeDepression
Technology Innovation
Strategic Al-liance
Pay free service, M&A
Success
Sales, # customers, certificate& Award
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Q&A
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(Appendix) Woongjin Coway IT Infra (1/5)
• To deal with huge amount of customer's information, Woongjin Coway adopted SAP ERP system
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Woongjin Coway IT Infra (2/5)
<End to end process>
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Woongjin Coway IT Infra (3/5)
35 billion won
Inventory Prime cost
10 billion won
<Achievements of ERP system>
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Woongjin Coway IT Infra (4/5)
<Woongjin’s MIS>
• Woongjin wanted to check the performance of hundreds of offices on a daily basis
• So, they adopted MIS system.
• Not only it determine a Cody'sperformance, but also it provide feedback.
• Woongjin can motivate theiremployee and provide best serviceby using MIS.
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Woongjin Coway IT Infra (5/5)
< Woongjin’s EIS>
FlexibilityFlexibilityEffectivePresentation
EffectivePresentation
Value addedInformationValue addedInformation
• KPI management
• Grasp at a time
• Deal with rapid changing circum-stances
• ad hoc information
• Get information at the right time
• High quality of in-formation
• Make use of active information