SAIC Future StrategyGroup 27

Terry Weng 091152 Lehana singh 091133

Mars Ren 091119 Cindy I tang 091140 Mavis yang 091171

Lets compare both the companiesBasis of Comparison

SAIC Ssangyong Favorable / Unfavorable for acquisition

Revenues $ 15 Billion $ 3.139 Billion Favorable*

Business Model

Contract Manufacturing Independent / Self sufficient Identity

Favorable

Employees Competitive Union Controlled Unfavorable

Ownership SOE JV with Foreign companies

A large chunk owned by creditors

Favorable as creditors want to exit within 5 years

Management Competitive Heavy influence of Workers

Unfavorable

Competition in home country

Intense (only 2 players have more than 10% mkt. share)

Relatively low Unfavorable*

*Integration after acquisition, Harbir Singh, 98-33, The Wharton Financial Institution Center

How much hardware is required to meet Global Ambitions (10 scale Gap Analysis)

5 Important Factors SAIC Needs

Strong R&D Capability

Good market reach

Reputed Brand

Strong Product Portfolio

Regulatory support

Ssangyong Offer

Good background in

R&D

Reach in Korea

Well recognized in Korea

Strong Product Portfolio

Strong Korean Government

support

Fit evaluation

Good

OK

Needs facelift

Excellent

Excellent + Chinese Govt.

Support

Manf.

Portfolio

Branding

Sales

R&D

0 1 2 3 4 5 6 7 8 9 10SAICSMCGap

What about soft issues ?

Software

Employees

Union Behavior not conducive

Unrealistic Demands

Want Board Position

Top Management Weak in front

of Union

Externally controlled past

Culture

Technical Expertise

Part of big Group

• May create Problem in future business policies• Potential conflict with SAIC Management• Some of proposed demands not viable for profitable

O/P.Union

• Potential interlinks with other companies in conglomerates (Time Bomb)

• Technical superiority culture may harm in futureCulture

Hard Factor Soft Factor

Post Acquisition Cultural Issues

Union Problems

Complementary Offer

China Korea Other

SAIC

Manf

SAIC

Brand

Rover Mktg

Rover R&D

SMC R&D

SAIC Brand

SMC R&D

SMC Brand

Rover Mktg

SMC N/W

Middle Mgmt

New Subsidary / New Name / Mgmt

D3

HR - SAIC Manf - SMC

D4

R&D - SMC

Mktg - SMC

D1 D2Top Mgmt

Selected from Union (Rotation Based)

Sales Head of

SMC Korea

SAIC Manf. Dept.

SAIC HR

Dept

Parent Company - SAIC

china Korea

Car(SMC,SAIC)

Mil. jeepCar

(SMC)SUV

Capacity Expandable Capacity Constant

ProductionChinaKorea Other

New Brand(SAIC)

SMC New Brand

SMC

LongTerm

Brand

ShortTerm

China,Korea,East

EuropeOther

Own distribution

network

Independent distributer

Sales

Philosophy Kill SMC influence

Establish New Brand

PortfolioGeo

grap

hica

l Dis

tanc

e Own Network

Independent Network

Special Agreement Scheme(New Subsidiary)

Employee conditions

Agreed+

•No new recruitment

•Performing employees promoted

•Performance System implemented strictly

•Firing for poor performers

Operations

Conditions Agreed

+

•Some models to manf. Both in China & Korea

•Investment according to Korean Market growth

Corporate conditions

Agreed +

•New name and management for company

•Board member to be appointed by SAIC ( 6 months Roatation Basis)