REQUIREMENT: Read the following case study and answer all the questions. Pressure mounts on chaebol chiefs Capturing the voice of minority shareholders is crucial for improving the woeful corporate governance standards in the country, which is said to be one of the biggest factors behind the so called Korean discount. Korean companies undervalued by about 20 percent relative to their Asian peers. At the centre of the push is Navistock, a small listed company running an online community website for minority shareholders. Navistock has become a significant force in pushing for better corporate governance, nurturing an online group of 35,000 minority shareholders. Our biggest aim is to improve corporate governance, which often means better decision making by management, says Kim Jung-hyun, chief executive of Navistock. The problem in Korea is that key management decisions are often made for the benefit of the founding families or the senior management of those companies rather than general shareholders. But the countrys chaebol, the huge family run conglomerated, are facing growing shareholder calls for bigger payouts, spurred by stalling growth in capital investment and new president Park Geun-hye, who has promised to attack corporate governance failings. The cross-shareholdings between chaebol companies, which enable the founding families to maintain control, have reduced the clout of other shareholders and their appetite to challenge management. Only about 0.5 per cent of votes went against proposals at shareholder meetings in the first half of last year. The result, however, has been speedy decision-making among the countrys big family run conglomerates, which Mr Kim admits has quickened South Koreas rapid economic development over the past several decades. But he warns that this is causing serious governance problems, such as irregular transfer of wealth, with control being passed on to second and third generations. Navistock has already had some successes in improving corporate governance. With its help, minority shareholders have replaced senior executives at BNB Sungwon, a stainless steel pipe maker, which was delisted in May, and stopped Samyang Optics from being delisted last year by staging street protests. Mr Kim expects the power of minority shareholders to accelerate in Korea amid growing calls for economic democracy, although he believes it will be a bumpy ride. To make that ride easier he plans to join forces with institutional investors in urging the push for better corporate governance standards. Source: Pressure mounts on chaebol chiefs, Financial Times, 24/2/2013 (Song Jung-a). 1. Why is Navistock trying to improve the corporate governance of the chaebol companies? 2. How have the chaebol managed so far to limit the power of shareholders? 3. Define the working culture of Korean chaebol by using the Trompenaars Four Culture Types model. Which of the four types of the cultures explains chaebol corporate culture? 4. What strategies would you suggest to Navistock in order to improve the corporate governance of the chaebol companies? Justify your answer.

This question is from CROSS CULTURAL MANAGEMENT and DIVERSITY