Company Case Study - POSCO, Affymetrix -

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Company Case Study - POSCO, Affymetrix -

• POSMIT LAB

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Case1 - POSCO
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Agenda
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POSCO in Steel Industry

• World steel association predicts further growth
• Challenges
• Innovation
• Environment
• Sustainable growth
• POSCO 4th largest producer
• POSCO established 1969 by government
• Now private company

World crude steel production million metric
tons
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FINEX - Background
Company Develop-ment Capacity (ton/yr) Note
COREX VAI Commercial 0.6 mil. Commercial
DIOS JISF Pilot plant 0.15 mil. RD stopped
HIsmelt Rio-Tinto Commercial 0.8 mil. Commercial
CCF Hoogovens Pilot plant 0.15 mil. RD stopped
TECNORED Tupi/Icomi Demo plant 0.3 mil. Started in 2002
FINEX VAI / POSCO Commercial 1.5 mil. Commercial
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FINEX - Development

• Challenges
• Increasing prices for plants
• Reinforcement of pollutants restriction
• Increasingly competitive steel market
• Research and Development
• Started in 1992, based on COREX technology
• Invested 550 billion KRW (470 million USD)
• Finalized in 2002 commercialized in 2007

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FINEX - Technology
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FINEX - Advantages
Innovative, next-generation iron-making
technology!
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Agenda
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Porters Value Chain
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POSCOs Infrastructure

• FINEX RD Project Department
• POSPIA IT systems
• Corporate culture
• 6 Sigma initiative
• Loyalty and high working moral of employees
• Corporate responsibility
• Sustainability
• Environment social contribution

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HR Management

• Emphasis on learning, developing employees to
  obtain market leadership in the steel industry
• HR training
• POSTECH
• Knowledge management system
• Communities of Practice (CoP)

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Tech Development of FINEX

• Sources and Types of Innovation
• Manufacturer innovation
• Technological process innovation
• Technological paradigm
• Emerging technology to replace current technology
• Cooperation Strategic Alliance
• Development agreement with VAI, which later
  became part of Siemens, in 1992

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Procurement

• Steel-N.com
• Customer and supplier interaction through i2
  SRM Oracle9i SCM
• e-Sale Portal
• Solutions for online transactions
• Offline transactions guidelines
• e-Procurement
• POSCOs suppliers and trading partners connected

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Inbound Logistics

• Coal and iron
• Online bidding for suppliers
• Investments in mines
• Joint venture between POSCO and Rio Tinto Coal
• Techno Partnership program
• Diversification strategy
• POSDATA, POSRI, POSCO EC

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Operations

• FINEX RD Project Department
• 1992 1995 Lab Scale Test
• 1996 1998 Model Plant Test (15 ton/day)
• 1999 2002 Pilot Plant Test (150 ton/day)
• 2003 2005 Demo Plant (0.6 mil. ton/yr)
• 2004 2007 Commercial Plant (1.5 mil. ton/yr)

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Outbound Logistics

• POSTEEL
• Easy access to customers
• Plants nearby water
• Easier shipping

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Marketing Sales

• Commercialization
• Media coverage
• Annual report and website
• FINEX in global market
• Steel project in Orissa (India)
• Steel project in Vietnam
• Protecting innovation
• Some processes patented
• IP through business secrets

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Agenda
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Value Chain Analysis

• Industry Dynamics with FINEX
• Towards dominant design
• Gain competitive advantage
• Success in technological innovation
• Innovation Strategy with FINEX
• First-mover advantages
• IT opportunities
• Process improvement

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The Korean Way

• Hypothesis 1 vs. FINEX
• Top-down ownership
• Diversification strategy
• Project-focused organization
• Americans Japanese vs. FINEX
• Radical innovation, over time
• Americans - lost focus
• Japanese not invested
• Further investigation
• Innovation plan
• Sustainability plan
• Innovation process

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The Korean Way

• Hypothesis 2 vs. FINEX
• Process improvement
• Cost reduction
• Production improvements
• Americans Japanese vs. FINEX
• No short-term profitability and high risks
• Americans No go
• Japanese high risk and investment
• Further investigation
• Increased profitability
• Increased market share
• Industry and external environment

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Agenda
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Conclusion

• FINEX
• Successful now
• Interesting for the future
• Hypothesis 1
• True?
• More detailed information
• Hypothesis 2
• True?
• Early to prove profitability and market share

FINEX?
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Discussion Issues

• What are the benefits of dominant design?
• In POSCOs case, do you think POSCO takes the
  first-mover advantages through FINEX?