SK Planet in 2013: A Korean Giant's Big Bet on the U.S. Market

SK Planet in 2013: A Korean Giant's Big Bet on the U.S. Market

By
Robert A. Burgelman, Steve W. Chung, Jon F. Nathanson, Won-yoh Lee
2013|Case No.SM222| Length 27 pgs.

The case details the strategic decisions that SK Planet, a leader in web and mobile services in its home country of Korea, needed to make regarding the best way to carry out an aggressive global expansion—most importantly into the United States. The $1 billion company had a war chest of $600 million in cash, which allowed company leadership to consider three strategic options for evaluation: 1) Port or rebrand SK Planet’s top-ranked Korean services to the U.S. A challenge with this option was that these platforms were developed largely for the Korean market and might not translate to U.S. audiences. Also, many of these services would face entrenched, direct competition within the U.S.; 2) Develop or expand organically, by way of chartering new SK Planet divisions under experienced Korean or American executives. The downside was that this would involve delays in getting new divisions off the ground, and the company needed to invest significant time and energy in researching the U.S. market; 3) Follow a Merger & Acquisitions strategy using its $600 million in cash. However, this would involve a high degree of risk, and if not managed carefully, mergers could lead to culture clashes between U.S. and Korean executives. Whichever option it chose, SK Planet set a three-year goal for its expansion efforts. While nominally short, the company saw this as the critical time frame before the smartphone ecosystem in the U.S. reached maturation and the incumbents fortified their market positions.

Learning Objective

The teaching goals of the case are for the students to study 1) How to set up and staff a Silicon Valley-based subsidiary for a Korean telecom company. 2) The importance of putting a top-level executive in charge of such a subsidiary. 3) Evaluating strategic options for penetrating the U.S. market with mobile applications and services developed first in Korea. 4) Determining the appropriate level of resources and the appropriate time horizon for achieving success in penetrating the US market. 5) How and when to determine the right time to exit if the strategy does not work.

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