Comparison Hightech And Service In South Korea

MASTER OF MANAGEMENT GADJAH MADA UNIVERSITY OPERATION MANAGEMENT

“Comparison Services and High-Tech in South Korea”

By: Irwan A. Bachtiar

Content Content.....................................................................................................1 Figures......................................................................................................2 Abstract....................................................................................................3 Country Overview.....................................................................................4 Background..............................................................................................6

Terminology and Definition.......................................................................12 Banking Services in South Korea..............................................................19 South Korea Micro Electronics Industries..................................................23 Resume About Comparing Two Sectors....................................................25 Managing Quality......................................................................................26 Prospect & Potential High-Technology.......................................................34 Commentary.............................................................................................35 Conclusion................................................................................................36 Sources.....................................................................................................37

Figures Figure 1. South Korea 2007......................................................................4 Figure 2. South Korea Economic Growth (1960 – 2007)...........................5 Figure 3. Samsung Cell-Phones Products.................................................7 Figure 4. EveR-3, an android capable of expressing some human emotions .................................................................................................................9 Figure 5. M-Banking..................................................................................18 Figure 6. South Kore Bank........................................................................21 Figure 7. Hynix microchips semi-conductor..............................................22 Figure 8. Samsung logo............................................................................23 Figure 9. Samsung Experience Store........................................................24 Figure 10. J-i-T in e-learning concepts......................................................28 Figure 11. Taguchi quality loss function...................................................28 1

Figure 12. Part of the employee...............................................................31 Figure 13. The Kano Model.......................................................................33

Abstract South Korea as one of The Four Asian Tigers (along with Taiwan, Singapore and Hong Kong) is a develop country that has so many improving in many sectors. Government and public has try to elaborate each others in the main business, including services business (specifically in Banking Services) and High Technology. In Banking Services, South Korea serve good quality in saving money along with using their technology such as ATM, transfer, financial, stock exchange, etc. Banking Services for public in South Korea was delivered many benefits for customer, each individual deserve all the services facility. In High Technology along with Japanese invasion, South Korea can be good rivalry in that business, such as cell phones business, providing by Samsung or in automotive industry, with all korean’s famous brands such as KIA, Hyundai, and Daewoo. Don’t forget will chip for computer providing by Samsung and Hynix. Elaborate this two sectors can give new perspective in mix business in South Korea, How to apply the technology in main Banking Business or How services business use high-technology to maintain and 2

deserve their costomer. Compare this two sector separetely also be another phase of topics in South Korea main business. How services and high-tech playing roles in public living. The last topic, is how to explain quality management with prospect and potential in Banking Services and High Technology in South Korea. As Operations Management lesson, quality management has perspective to value Banking Services and High Technology with ISO 9000, TQM, Continous Improvement, etc. Then prospect and potential explain about forecasting its business in the future, it overview, design, process, etc.

Country Overview South Korea is a developed country. It has the fourth-largest economy in Asia and a High-income OECD member, classified as an Advanced economy by CIA and IMF. Today, it is among the world's fastest growing advanced economies and is leading the Next Eleven nations; its economic success serves as a role model for many developing countries. South Korea has a high-tech and futuristic infrastructure, and is a world leader in technologically advanced goods such as electronics, automobiles, ships, machinery, petrochemicals and robotics, headed by Samsung, POSCO, and Hyundai Heavy Industries. Since the 21st century, South Korea's modern culture has become popular in Asia and beyond in a phenomenon known as the Korean wave.1

1

Data accessed on http://en.wikipedia.org/wiki/South_korea, March 11. 2009.

3

Figure 1. South Korea Map 2007.

South Korea has been the world's second fastest growing economy for over four decades. For example, in 1957 South Korea's

annual

per

capita

GDP

was

comparable to that of Ghana, and by 2008 it was 17 times as high as Ghana's. Its remarkable transformation to a wealthy developed country in less than half a century is often called the Miracle on the Han River and earned the distinctive reputation

of

"Asian

Tiger"

in

the

international community. South Korea's economic success is now a role model for many developing countries. Today, South Korea has a highly developed trillion dollar economy and is a member of the OECD, classified as a High-income economy by the World Bank and an Advanced economy by the IMF and CIA in 2007, 2008. Its capital, Seoul, is consistently placed among the world's top ten financial and commercial cities.

Figure 2. South Korea Economic Growth (1960 – 2007). Source: www.wikipedia.org

South Korea is regarded as one of the strongest economies in the world, despite lacking natural resources and having the smallest territory among the G-20 major economies. The South Korean economy is the 4

fourth largest in Asia and 13th largest in the world. Like West Germany and Japan, rapid industrialization since the 1960s has made South Korea one of the world's top ten exporters. It is the seventh largest trading partner of the United States. South Korea has the second highest savings rate in the developed world and has the world's sixth biggest foreign exchange reserves. An extremely competitive education environment and motivated workforce are two key factors driving this knowledge economy. the country files the largest number of patents per GDP and R&D expenditure in the world. Many globally well-known South Korean conglomerates such as Samsung, Hyundai-Kia, Hyundai Heavy Industries, LG, SK, and POSCO have rapidly grown to become world leaders in their respective industries. Samsung Group is the world's largest conglomerate and a leading consumer electronics brand. In 2006, Samsung Group alone would have been the world's 34th largest economy if ranked. The Hyundai Kia Automotive Group is the second largest car company in Asia and one of the top five automakers in the world. Hyundai Heavy Industries is the world's largest shipbuilder and POSCO is the world's second largest steel maker. South Korea is the world's largest shipbuilder, and one of the world's top five automobile manufacturing nations, and the sixth largest steel producer in the world.

Background A. Objectives •

To Compare between Services Business and High Technology in South Korea.

•

To explore, how Services Business can contribute to the evolving field of Service Science, Management (Banking), and Technology. 5

•

To define High Technology in South Korea and which technology that appropriate with banking industry.

B. South Korea Service Business Why it is better to invest in South Korea rather than Indonesia or another ASEAN Country? Because South Korea gives investors so many advantages, including competitive business challange, small taxes, good living for employee and so many things that makes South Korea looks better. In some sources such as wikipedia.org we can see an overview about South Korea as one of The Four Asian Tigers along with Singapore, Taiwan and Hong Kong. If we compare with Japan, with their invasion all over the world, South Korea has putted themseves in good position, if we want to talks about world of business. Samsung and LG as leading micro electronics provider has so many customer all around the world. In services business (specifically later as Banking Services) South Korea has improved the country with their main services, such as transportation, education, banking, financial, health, delicious cuisine, entertainment, and other things. Later on specific, we talk about banking services, it is about maintain good quality services along with customer, invertor and public. South Korea banking services business try to providing good facility and service, also with eloborates banking services with high technology to gives satisfaction to customer and gives safety to saving money in bank at South Korea.

C. South Korea High-Tech Korea has a highly developed high-tech infrastructure, with the world's highest broadband internet access per capita. In 2007, the Economist Intelligence Unit ranked South Korea's IT industry

6

competitiveness third in the world. Korea's e-readiness was ranked 15th, and e-Government readiness 6th in 2008. In consumer electronics, South Korea is the world's largest OLED and Plasma display maker. Both Samsung and LG are major makers of LCDs, and mobile phones. South Korea is also the world's leading memory chip producer and Samsung and Hynix are the world's second

and

semiconductor

sixth

largest

companies

in

the

world. Samsung is also the world's largest

maker

of

laser

printers.

Samsung Techwin is the world's third largest maker of digital cameras. Figure 3. Samsung Cell-Phones Products.

South Korea also exports radioactive isotope production equipment for medical and industrial use to countries such as Russia, Japan and Turkey. The government is also investing in the robotics industry, with the stated aim of becoming the "world's number 1 robotics nation" by 2025. There are also plans to develop other sectors, including financial services, biotechnology, aerospace and entertainment industries. South Korea High-Tech Miracle.2 Earlier this year in a drablooking building 25 miles from Seoul, the Samsung Corporation began mass-producing what most of the American electronics industry has abandoned: one-megabit chips, computer memory devices storing more than a million pieces of data. For South Korea, whose economic miracle was built on its cheap labor, the one2

Ibid.

7

megabit chip is a foray into ultra-sophisticated technologies that many thought beyond its reach. Samsung says it is now shipping 1.5 million of the D-RAM (dynamic random access memory) chips a month. That is enough to make it a full-fledged member of an exclusive club producing the most advanced type of memory circuits now made - a club dominated by Japanese companies. Samsung is aiming for four million to five million chips a month by the end of next year, when it will also start producing four-megabit chips. The contrasts with the United States, where only a handful of companies are willing to bear the huge expense and risks of the technology, are lost on no one here. Indeed, Samsung's mastery of the demanding technology is a source of national pride for South Korea, whose success has been built around textile factories, shipyards and automobile assembly lines. Giant pictures of the chip appear on billboards in downtown Seoul. Government officials tout the accomplishment as an example of how South Korea will rival Japan, whose occupation of the Korean Peninsula for the first half of the 20th century and economic success in the second half embitter many people here. For all that, South Korea's success in one-megabit chips does not necessarily herald a new era of technological competitiveness. Despite

tempting

comparisons,

even

the

most

enthusiastic

executives here freely admit that South Korea is no Japan One reason is that South Korea is desperately short of engineering talent. The megabit chip project at Samsung, and projects like it at Goldstar, Daewoo and Hyundai, Korea's biggest conglomerates, have absorbed a huge portion of South Korea's technology resources. More ambitious projects requiring more sophisticated design and software skills -like microprocessors or computer systems bigger than a desktop personal computer - are receiving relatively little attention.

8

Moreover, South Korea still depends highly on Japan for the equipment it needs to manufacture advanced microelectronics. Many executives here wonder whether they will be cut off by Japan's electronics giants, which often seem more worried about South Korea and its hard-working, low-cost labor force than about the United States. For now, however, South Korea's success in one-megabit chips has brought it an ally: American computer makers. Eager for alternative sources to avoid overdependence on Japan, they are beginning to line up for Samsung's chips. I.B.M., which along with Texas Instruments Inc. and tiny Micron Technology Inc. in Idaho is the only United States manufacturer of megabit chips, is already a customer for Samsung's one-megabit chip. Robotics Technology. Robotics has been included in the list of main national R&D projects in Korea since 2003. In 2009, the government announced plans to build robot-themed parks in Incheon and Masan with a mix of public and private funding. In 2005, Korea Advanced Institute of Science and Technology developed the world's second walking humanoid robot, HUBO. A team in the Korea University of Science and Technology developed the first Korean android, EveR-1 in May 2006. EveR-1 has been succeeded by more complex models with improved movement and vision. Next models are scheduled to be completed by 2010.

9

Figure 4. EveR-3, an android capable of expressing some human emotions.

Biotechnology. Since the 1980s, the Korean government has actively invested in the development of a domestic biotechnology industry, and the sector is expected to grow to $6.5 billion by 2010. Medical sector accounts for a large part of the production, including production of hepatitis vaccines and antibiotics. Recently, research and development in genetics and cloning has received increasing attention, with the first successful cloning of a dog, Snuppy, and the cloning of two females of an endangered species of wolves by the Seoul National University in 2007. The rapid growth of the industry has resulted in significant voids in regulation and ethics, however, as was highlighted by the scientific misconduct case involving Hwang Woo-Suk.

10

Terminology and Definition A.

Terminology and Definition of Services In this paper, before we go through the centre point, it is better to

know about terminology that we used in this paper, such as Services, Information, Communication and Technology. South Korea as a country 11

they have meantion the terminology globally same as many develop country, so here we can see about terminology to elaborate, compare and make analysis later on. Service is the diametrically opposed non-material counterpiece of a physical good. A service provision comprises a sequence of activities that does not result in ownership of the outcome, and this is what fundamentally differentiates it from furnishing someone with physical goods. Service provision is a process that creates predetermined benefits by effectuating either a change of service consumers, a change in their physical possessions or a change in their (in)tangible assets.3 Services can be paraphrased in terms of their generic key characteristics. 1. Intangiblity Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted or heard. Thus, there is neither potential nor need for transport, storage or stocking of services. Furthermore, a service cannot be (re)sold or owned by somebody, neither can it be turned over from the service provider to the service consumer nor returned from the service consumer to the service provider. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer. 2. Perishability Services are perishable in two regards 

The service relevant resources, processes and systems are assigned for service delivery during a definite period in time. If the designated or scheduled service consumer does not request and consume the service during this period, the service cannot be performed for him. From the perspective of

3

Data accessed on http://en.wikipedia.org/wiki/Service_(economics), April 11. 2009.

12

the service provider, this is a lost business opportunity as he cannot charge any service delivery; potentially, he can assign the resources, processes and systems to another service consumer who requests a service. Examples: The hair dresser serves another client when the scheduled starting time or time slot is over. An empty seat on a plane never can be utilized and charged after departure.  When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example:

the

passenger

has

been

transported

to

the

destination and cannot be transported again to this location at this point in time. 3. Inseparability The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. In many cases the service delivery is executed automatically but the service provider must preparatorily assign resources and systems and actively keep up appropriate service delivery readiness and capabilities. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Examples: The service consumser must sit in the hair dresser's shop & chair or in the plane & seat; correspondingly, the hair dresser or the pilot must be in the same shop or plane, respectively, for delivering the service. 4. Simultaneity

Services are rendered and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be generated from scratch 13

without any delay and friction and the service consumer instantaneously consumes the rendered benefits for executing his upcoming activity or task. 5. Variability

Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are regarded as heterogeneous or lacking homogeneity and are typically modified for each service consumer or each new situation

(consumerised).

Example:

The

taxi

service

which

transports the service consumer from his home to the opera is different from the taxi service which transports the same service consumer from the opera to his home - another point in time, the other direction, maybe another route, probably another taxi driver and cab. Each of these characteristics is retractable per se and their inevitable

coincidence

complicates

the

consistent

service

conception and make service delivery a challenge in each and every

case.

Proper

service

marketing

requires

creative

visualization to effectively evoke a concrete image in the service consumer's mind. From the service consumer's point of view, these characteristics make it difficult, or even impossible, to evaluate or compare services prior to experiencing the service delivery. Mass generation and delivery of services is very difficult. This can be seen as a problem of inconsistent service quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent service 14

quality. For many services there is labor intensity as services usually involve considerable human activity, rather than a precisely determined process; exceptions include utilties. Human resource management is important. The human factor is often the key success factor in service economies. It is difficult to achieve economies of scale or gain dominant market share. There are demand fluctuations and it can be difficult to forecast demand. Demand can vary by season, time of day, business cycle, etc. There is consumer involvement as most service provision requires a high degree of interaction between service consumer and service provider. There is a customer-based relationship based on creating long-term business relationships. Accountants, attorneys, and financial advisers maintain long-term relationships with their clientes for decades. These repeat consumers refer friends and family, helping to create a client-based relationship. Any service can be clearly, completely, consistently and concisely specified by means of the following 12 standard attributes which conform to the MECE principle (Mutually Exclusive, Collectively Exhaustive), The meaning and content of these attributes are: a. Service Consumer Benefits describe the (set of) benefits

which are callable, receivable and effectively utilizable for any authorized service consumer and which are provided to him as soon as he requests the offered service. The description of these benefits must be phrased in the terms and wording of the intended service consumers. b. Service-specific Functional Parameters specify the functional

parameters which are essential and unique to the respective service and which describe the most important dimension of the servicescape, the service output or outcome, e.g. maximum emailbox capacity per registered and authorized e-mail service consumer. 15

c. Service Delivery Point describes the physical location and/or

logical interface where the benefits of the service are made accessible, callable, receivable and utilzable to the authorized service

consumers.

At

this

point

and/or

interface,

the

preparedness for service delivery can be assessed as well as the effective delivery of the service itself can be monitored and controlled. d. Service Consumer Count specifies the number of intended,

identified, named, registered and authorized service consumers which shall be and/or are allowed and enabled to call and utilize the defined service for executing and/or supporting their business tasks or private activities. e. Service Readiness Times specify the distinct agreed times of

day when ➢ The described service consumer benefits are

 accessible and callable for the authorized service consumers at the defined service delivery point  receivable and utilizable for the authorized service consumers at the respective agreed service level ➢ All service-relevant processes and resources are operative

and effective ➢ All service-relevant technical systems are up and running

and attended by the operating team ➢ The

specified

service

benefits

are

comprehensively

delivered to any authorized requesting service consumer without any delay or friction. The time data are specified in 24 h format per local working day and local time, referring to the location of the intended service consumers. f.

Service Support Times specify the determined and agreed times of day when the usage and consumption of commissioned services is supported by the service desk team for all identified, registered and authorized service consumers within the service 16

customer's organizational unit or area. The service desk is/shall be the so called the Single Point of Contact (SPoC) for any service consumer inquiry regarding the commissioned, requested and/or delivered services, particularly in the event of service denial, i.e. an incident. g. Service Support Languages specifies the national languages

which are spoken by the service desk team(s) to the service consumers calling them. h. Service Fulfillment Target specifies the service provider's

promise of effective and seamless delivery of the defined benefits to any authorized service consumer requesting the service within the defined service times. It is expressed as the promised minimum ratio of the counts of successful individual service deliveries related to the counts of requested service deliveries. The effective service fulfillment ratio can be measured and calculated per single service consumer or per consumer group and may be referred to different time periods (workday, calenderweek, workmonth, etc.) i.

Maximum Impairment Duration per Incident specifies the allowable maximum elapsing time [hh:mm] between: ➢ The first occurrence of a service impairment, i.e. service quality degradation or service delivery disruption, whilst the service consumer consumes and utilizes the requested service, ➢ The full resumption and complete execution of the service delivery to the content of the affected service consumer.

j.

Service Delivering Duration specifies the promised and agreed maximum period of time for effectively delivering all specified service consumer benefits to the requesting service consumer at the currently chosen service delivery point.

k. Service Delivery Unit specifies the basic portion for delivering

the defined service consumer benefits. The service delivery unit is the reference and mapping object for all cost for service 17

generation and delivery as well as for charging and billing the consumed service volume to the service customer who has commissioned the service delivery. l.

Service Delivering Price specifies the amount of money the service customer has to pay for the distinct service volumes his authorized service consumers have consumed. Normally, the service delivering price comprises two portions  a fixed basic price portion for basic efforts and resources which provide accessibility and usability of the service delivery functions, i.e. service access price  a price portion covering the service consumption based on ✔ fixed flat rate price per authorized service consumer and delivery period without regard on the consumed service volumes, ✔ staged prices depending on consumed service volumes, ✔ fixed price per particularly consumed service delivering unit.

Service

systems are

value

co-creation configurations of

people,

technology, internal and external service systems connected by value propositions, and shared information (such as language, laws, measures, models, etc.).4

B. Metric for Technology in The Service Sector ➢ Organizational 4

Daim, Tugrul & Fujiwara, Tetsuro. 2007. Symposium on “Technology Management in The Service Sector”. PICMET 2007.

18

• Balanced Scorecard (Common Measure) • Do all the stakeholders buy that? ➢ Technology • R&D used for serviceshnology in the Service Sector • Does the existing measures work services as well • Technology for the services ➢ Economic and Financial • Cost • Productivity • Time Delivery • Intellectual Property • Sales, Profit, Market Share ➢ Human Side • Experience with Service that is personal • Experience Satisfaction Emotional • Stakeholders, Emotions Maslow’s Hierarchy ➢ Value Added • Customers Willingness to Pay ➢ Required Action A multi stakeholder oriented approach for creating the Metrics for Technology in the Service Sector : a. Government b. Regulatory Entities c. Industry d. Universities e. Firms f. NGOs for the Development of Service Sector

19

Banking Services In South Korea Types of Bank Accounts

There are several different types of bank accounts available to citizens and foreigners alike. Most accounts do not require a minimum balance nor do they charge any fees to maintain one.

Figure 5. M-Banking.

➢ Savings

These accounts work the same in South Korea as in most other countries. The client deposits money at the rate he/she desires and the bank offers interest as an incentive to save. Generally, the longer the term of commitment, the higher the interest rate will be. For shorter term accounts, the interest rates are fairly low for savings accounts (about 2%-4%). ➢ Time-Deposit

A time deposit account works more like a checking account. Some banks do offer interest on time deposits, but they are generally lower than savings accounts because the interest depends on the length of time you intend to keep your account. ➢ Instalment

This

account

requires

the

client

to

make

monthly

instalments/payments to the bank for interest. At maturity, the client will have made a profit. This works like a Certificate of 20

Deposit, except the money does not have to be paid upfront, but in monthly deposits.

After signing up for an account, you will receive a bankbook to record your transactions and a bank card within a couple of weeks. The bank card is strictly an ATM card to withdraw money from any ATM machine. It cannot be used to charge purchases to your account.

Services, Fees & Interest The beauty about most Korean bank accounts is the lack of service fees that they charge. So don’t get sucked into paying extra fees because it is likely that you won’t have to anywhere else. If you are looking to make some interest on your account, the best route to take would be a savings account or an instalment account. Interest is generally between 2% and 4% and can be paid at varying periods of time (annually, semi-annually, monthly, etc). Depending on which bank you sign up with, you may be offered tax benefits (especially if you are considered a resident of South Korea). Rates vary between banks and types of accounts. For example, Korean Exchange Bank charges 10.5% for taxes on a Time Deposit account (numbers were collected in March 2007 and are subject to change).

South Korea Banking Industry Analysis5 In the market research report on “South Korean Banking Industry Analysis (2007-2011)” provides extensive research and objective analysis of the growing banking industry, their product quality, and services offered in South Korea. Facts and figures given in this report help clients to analyse the leading-edge opportunities critical to the success of the banking Industry in South Korea. It also helps investors, financial service 5

Data accessed on http://www.bharatbook.com/Market-Research-Reports/South-KoreanBanking-Industry-Analysis-2007-2011.html, April 18. 2009.

21

providers, and global banking players navigate the evolving market of banks in South Korea. a. Key Products Analysed Key products namely Deposits, Credit Cards, Debit Cards, loans, and ATM facility are also analysed supported by the facts like the market trends. b. Key Players Analysed

This section provides an overview, key facts, financials and stock performance of several players like Kookmin Bank, Hana Bank, Woori Finance Holdings Plc, Shinhan Financial Group and SC First Bank. c. Key Issues and Facts Analysed This report attempts to answer key questions that are critical for the success of banking sector in South Korea, such as: a. How competitive is the market landscape of Banking Industry in South Korea? b. The nature of the services driving the Banking Sector in South Korea? c. What are the various opportunities and challenges in this industry? d. What are the prospective areas of investment for the banks in the near future? e. Which factors will lead to the growth of bankcards, loans and deposits in South Korea? d. Key Findings a. As per 2004 records, latest available, South Korea is ranked second after the United States in the number of credit and debit cards people holders (3.35 card per individual). 22

b. Use of ATM only cards declined, largely due to the growth of debit cards and increasing use of Internet and home banking. c. Growing at a CAGR value of 12.29% during last five years (2001-2006), bank deposits reached US$ 531.7 Billion (Won 491869.3 Billion) at the end of 2006. d. South Korean Banks’ lending grew at a CAGR of 16.27% during the last five years. Total lending to the public was US$ 480.1 Billion in 2006. e. It is forecasted that Bank loans will grow with the CAGR of 19.29% during the period spanning 2007-2011 to reach US$ 1278.3 Billion (Won 1182540 Billion) in 2011. f. Implementation of Basel II accord will be main challenge for the South Korea banking industry. e. Research Methodology Used:

Information Sources Information has been sourced from namely, books, newspapers, trade journals, and white papers, industry portals, government agencies,

trade

associations,

monitoring

industry

news

and

developments, and through access to access to more than 3000 paid databases. Analysis Methods The analysis methods include the following: Ratio Analysis, Historical Trend Analysis, Linear Regression Analysis using software tools, Judgmental Forecasting and Cause and Effect Analysis.

23

Figure 6. South Korean Bank, Wooribank at Seoul 2007.

South Korea MicroElectronics Industries

Figure 7. Hynix microchips semi-conductor.

Hynix Semiconductor Inc. is a memory semiconductor supplier of dynamic random access memory ('DRAM') chips and flash memory chips. Formerly known as Hyundai Electronics, the company has manufacturing sites in Korea, the U.S., China and Taiwan. The company's shares are traded on the Korea Stock Exchange, and the Global Depository shares are listed on the Luxemburg Stock Exchange. Hynix memory is used by Apple 24

in some MacBook Pro computers and in PC desktops as well as the ASUS Eee PC.6 Samsung Group. Samsung is the world's largest conglomerate. It is South Korea's largest chaebol and composed of numerous international businesses, all united under the Samsung brand, including Samsung Electronics, the world's largest electronics company, Samsung Heavy Industries,

one

of

the

world's

largest

shipbuilders

and

Samsung

Engineering & Construction, a major global construction company. These three multinationals form the core of Samsung Group and reflect its name - the meaning of the Korean word Samsung is "tristar" or "three stars". Currently, Samsung has sixteen products that have dominated the world’s market share, including: DRAM, color cathode-ray tube TVs (CPT, CDT), SRAM, TFT-LCD glass substrates, TFT-LCD, STN-LCD, tuner, CDMA handset, color television (CTV), monitor, flash memory, LCD Driver IC (LDI), PDP module, PCB for handheld (mobile phone plates), Flame Retardant ABS, and Dimethyl Formamide (DMF). Plus in the Television market, Samsung and LG make the only screens for LCD TFT televisions and then later sell them on to the other companies. According to Interbrand and BusinessWeek, Samsung’s brand value ranked 43rd (USD 5.2billion) in 2000, 42nd (USD 6.4 billion) in 2001, 34th (USD 8.3 billion) in 2002, 25th (USD 10.8 billion) in 2003, 21st (USD 12.5 billion) in 2004, and 20th (14.9 billion) in 2005 among top global companies. In terms of export that directly contributes to the Korean economy, Samsung took up 18.1% of the all exports with USD 31.2 billion in 2000 and 20.7% with USD 52.7 billion in 2004. In addition, Samsung's tax payments to the Korean government in 2003 was KRW 6.5 trillion, which is about 6.3% of total tax revenue.

6

Data accessed on http://en.wikipedia.org/wiki/Hynix, April 18. 2009.

25

The market value of Samsung in 1997 reached KRW 7.3 trillion in 1997, which amounted to 10.3% of the Korean market but this figure increased to KRW 90.8 trillion taking up 22.4% in 2004. Moreover,

the

annual

net

profit

of

Samsung marked KRW 5.8 trillion in 2001, KRW 11.7 trillion in 2002, KRW 7.4 trillion in 2003, and KRW 15.7 trillion in 2004, showing forth a steady increase. Figure 8. Samsung Logo.

In order to enhance the working environment and build a strong and trustworthy foundation, the semiconductor sector of Samsung Electronics has been conducting a ‘Great Workplace Program’ called GWP since 1998. Then, in 2003, GWP has spread throughout the entire Samsung Group as Samsung Fire and Marine Insurance, Samsung SDI, Samsung Everland, Samsung Corporation, Cheil Industries, Samsung Networks, and others started to apply its core principles. In 2006, 9 subsidiary companies of Samsung Electronics, 80 overseas branches, and 130 overseas business sectors have reported that they are actively applying the GWP.7

7

Data accessed on http://en.wikipedia.org/wiki/Samsung, April 18. 2009.

26

Figure 9. Samsung New Experience Store.

27

Resume About Comparing Two Sectors To compare two sectors it is some operation management perspective that will explain later on. Services business (specifically banking services) it is not a big business as well if we compare with High Technology, South Korea really well develop in High Technology such as robotics, micro chips, micro electronics and aerospace. Banking services was provided by South Korea Government regulation that implement by South Korea’s bank. Divide by six parts (including Central Bank, Nationwide Bank, Government-Owned Bank, Local Bank, Other Bank Organization such as credit union & Korea Post, and Foreign Owned Bank. As international standards, banking services in South Korea serve in global professionals, serving good quality, good facility, advantages, etc. Woori Bank as government owned bank, has providing banking services mix with technology for the facility, such using ATM facility to do whole of business activity of customer or Just-In-Time technology to transfer money to another branch or banks. Then High technogy that showing before, is explain about dignity and proud about South Korea development. In micro chips and micro electronics business, South Korea leading the business along with Japanese invasion in automotive and electronics as well. This is remembering us how Korean and Japanese competing each other, Samsung and Sony makes so differences with the other company such as Phillips from Holland or Hawlett Packard. In the industries, they (Samsung and Sony) has main roles as good images company with good and sophisticated brands, in asia and european at least they putted their name as leading electronics brands, with many products, such as Samsung digital camera and Samsung Cell Phones or Sony with Sony 28

PlasyStation, television and cell-phones along with their merge with Ericsson (Sweden) as cell-phones company. In writer point of view, South Korea really develop in high technology although South Korean still have consistancy in banking services as one of services business in over that country, South Korea serve the best for many sectors and it is feel safety to invest there.

Managing Quality Quality we defined as the ability of a product or service to meet customer needs. To analysis the case between South Korea services and hightechnology, we also can elaborate that subjects with Quality Management. As we know, services business is a sector that not in manufacturing based, its intangibility, can be define as a solid products as well, but we believe that quality means conforming to standards and “making it right the first time”. In the Quality Management, also in services business, quality should be improved to increase its profits, by sales gains via; improved response, flexible pricing, improved reputation. Second, is by reduced cost via; increased productivity, lower rework and scrap costs, lower warranty costs.

Implication of Quality8 In addition to being a critical element in operations, quality has other implications. Here are three others reasons why quality is important: •

Company reputation

•

Product liability

•

Global implications

8

Heizer & Render. 2008. Operation Management. Ninth Edition. Pearson International Edition.

29

South Korea has many big company, for example is Samsung, if we remember Chelsea Football Club, we can see Samsung was in their main clothes. Samsung has good reputation, for a company that come from Asia, they are also famous all around the world, many products they sale, likes television, cell phones, dvd players, air conditioner and many things. For the global implication as a critical element in operation, Samsung is also put themselves in the big global market leaders as cell phones company, and they join banking services to serve good services for costomer.

International Quality Standards ISO 9000. Quality is so important globally that the world is uniting around a single quality standard, ISO 9000, its the only quality standard with international recognition. ISO 14000. The continuing internationalization of quality is evident with the development of ISO 14000, it is an environment management standard that contain five core elements : (1) environmental management, (2) auditing, (3) performance evaluation, (4) labeling, and (5) life cycle assesment. They new standards could have several advantages: •

Positive public image and reduced exposure to liability.

•

Good systematic approach to pollution prevention through the minimization of ecological impact of products and activities.

•

Compliance with regulatory requirements and opportunities for competitive advantage.

•

Reduction in need for multiple audits.

30

Total Quality Management9 Total Quality Management (TQM). It is refers to a quality emphasis that encompasses the entire organization, from supplier to customer. TQM stresses

a

commitment

by

management

to

have

a

continuing

companywide drive toward excellence in all of products and services that are important to the customer. Six Sigma. Is a program to save time, improve quality, and lower costs. Another Six Sigma definition is a program designed to reduce defects to help lower costs, save time, and improve customer satisfaction. Employee Empowerment. Is enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in the organization. Bencmarking.

Is

selecting

a

demonstrated

standard

of

performance that represents the very best performance for a process or an activity. The idea is to develop a target at which to shoot and then to develop a standard or benchmark against which to compare your performance. The step for developing benchmarks are: 1. Determine what to benchmark. 2. Form a benchmark team. 3. Identify benchmarking partners. 4. Collect and analyze benchmarking information. 5. Take action to match or exceed the benchmark. Just-in-Time (JIT). The philosophy behind just-in-time is one of continuing improvement and enforced problem solving. JIT systems are designed to produce or deliver good just as they are needed. JIT is related to quality in three ways:

9

Ibid.

31

•

JIT cuts the cost of quality.

•

JIT improve quality.

•

Better quality means less inventory and a better, easier-to-employ

JIT

system. Figure 10. J-i-T in e-learning concepts.

Taguchi

Concepts.

Most

quality problems are the result of poor products and process design. Genichi Taguchi has provided us with three concepts aimed at improving both products

and quality :

(1) quality

robust,

quality loss

function, (3)

target-

oriented

(2)

quality.

Figure 11. Taguchi quality loss function.

The Importance of Service Quality and the Evaluation of Meeting Customer Expectations. Customer research literature traditionally agrees that service quality is a measure of how well the service level delivered matches customer

32

expectations. Delivering quality service means conforming to customer expectations on a consistent basis. The delivery of high quality services is one of the most important and most difficult tasks that any service organisation faces. Because of their unique characteristics, services are very difficult to evaluate. Hence customers must look closely at service quality when comparing services. Service quality can be defined as a customers’ perception of how well a service meets or exceeds their expectations. In most cases service quality is judged by customers, and not by organisations. This distinction is critical because it forces service marketers to examine their quality from the customers’ viewpoint. For example, a bank may view service quality as

having

friendly

and

knowledgeable

employees.

However,

the

customers of this bank may be more concerned with waiting time, ATM access and security, as well as statement accuracy. Thus it is important for service organisations to determine what customers expect and then develop service products that meet or exceed those expectations. The Importance of Service Quality.10 The biggest obstacle for customers in evaluating service quality is the intangible nature of the service. How can customers evaluate something that they cannot see, feel, taste, or hear? Most consumers lack the knowledge or the skills to evaluate the quality of many types of services. Consequently, they must place a great deal of faith in the integrity and competence of the service provider. Despite the difficulties in evaluating quality, service quality may be the only way customers can choose one service over another. For this reason, services marketers live or die by understanding how consumers judge service quality. The following table defines five dimensions that customers use when evaluating the importance of service quality. They are tangibles, reliability, responsiveness, assurance, and empathy. Understanding Customer Expectations. Providers need to understand customer expectations when designing a service to meet or 10

Data accessed on http://www.businessteacher.org.uk/free-management-essays/servicequality-management-essay/#, April 18. 2009.

33

exceed those expectations. Only then can they deliver good service. Customers usually have two levels of expectations, which could be said to be desired and acceptable. The desired level of expectations is what the customer really wants. If this level of expectations is provided, the customer would be very satisfied. The acceptable level is viewed as a reasonable level of performance that the customer considers as being adequate. The difference between these two levels of expectations is called the customer’s zone of tolerance. Service companies sometimes use marketing research, such as surveys and focus groups, as a means of discovering customer needs and expectations.

Other

service

managers,

especially

restaurants,

use

comment cards, on which customers can complain or provide suggestions. Another approach is to ask employees. Because customer contact employees interact daily with customers, they are in a good position to know what customers want from the company. Service managers should regularly interact with their employees by asking their opinions on how to best serve customers. Service Quality Specification. Once an organisation understands its customers’ needs, it must establish goals to help ensure good service delivery. These goals, or service specifications, are typically set in terms of employee or machine performance. For example, a bank may require its employees to conform to a dress code. Likewise, the bank may require that all incoming phone calls be answered by the third ring. Specifications like these can be very important in providing quality service as long as they are tied to the needs expressed by customers. The

most

critical aspect

of service

quality

specifications

is

managers’ commitment to service quality. Service managers who are committed to quality become role models for all employees in the organisation. Such commitment motivates customer contact employees to comply with service specifications. It is also crucial that all managers within the organisation embrace this commitment, especially front line managers, who are much closer to customers than higher level managers. 34

Employee Performance. Once an organisation sets service quality standards and managers are committed to them, the organisation must find ways to ensure that customer contact employees perform their jobs well. Contact employees in most service industries like bank tellers, flight cabin crew, waiters, sales assistants, are often the least trained and lowest paid members of the organisation. What service organisations must realise is that contact employees are the most important link to the customer, and thus their performance is critical to customer perceptions of service quality. The means to ensure that employees perform well is to recruit and train them well so that they understand how to do their jobs. Providing information about customers, service specifications and the organisation itself during the training promotes this understanding. The evaluation and remuneration system used by the organisation also plays a part in employee performance. Many service employees are evaluated and rewarded on the basis of output measures such as sales volume (car salespeople) or the lack of errors during work (bank tellers). But systems using output measures over look other major aspects of job performance: friendliness, teamwork, effort and customer satisfaction. Thus customer oriented measures of performance may be a better basis of evaluation and reward.

35

Figure 12. Part of the employee.

Managing Service Expectations. Because expectations are so significant in customer evaluations of service quality, service companies recognise that they must set realistic expectations about the service they can provide. They can set these expectations through advertising and good internal communication. In their advertisements, service companies make promises about the kind of service they will deliver. Infact, a company that provides a service is forced to make promises since the intangibility

of

services

prevents

it

from

showing

them

in

the

advertisement. However, the advertiser should not promise more than it can deliver; doing otherwise may mean disappointed customers. To deliver on promises made, a company needs to have good internal communication among its departments, especially management, advertising, and operations. Assume, for example, that a restaurant’s radio advertisements guaranteed services within five minutes or the meal would be free. If top management or the advertising department failed to inform operations about the five minute guarantee, the restaurant very likely would not meet its customers’ service expectations. Even though 36

customers might appreciate a free meal, the restaurant would lose some credibility and revenue. The Kano Model.11 Dr. Noriaki Kano, a recognised Japanese quality engineer and customer satisfaction expert, spent several years studying customer

needs

and

expectations.

His

ideas

regarding

attribute

importance of services are embodied in the Kano Model which is well known in a wide range of different sectors. The Kano Model classifies product attributes and their importance based on how they are perceived by customers and their effect on customer satisfaction. The model measures the level of satisfaction with a product against consumer perceptions of attribute performance. Kano argues that the attributes can be classified into three categories: •

Threshold characteristics provide diminishing returns in terms of customer satisfaction. These are essential or must attributes or performance and do not offer any real opportunity for product differentiation. Providing threshold attributes and meeting customer expectations for them will do little to enhance overall customer satisfaction, but removing or performing poorly on them will hurt customer satisfaction, lead to customer complaints, and may result in customer defections.

•

Performance characteristics exhibit a linear relationship between perceptions of attribute performance and customer satisfaction. Strong performance on these need attributes enhances, while weak performance reduces, satisfaction with the product or service. Adding more attribute of this type to a product will also raise customer satisfaction.

•

Excitement characteristics are unexpected attributes that, when provided, generate disproportionately high levels of customer enthusiasm and satisfaction. When these nice to have attributes are

11

Ibid.

37

not

available

in

a

product,

it

does

not

lead

to

customer

dissatisfaction. Kano’s model affirms the role attribute importance plays in understanding how satisfaction evaluations are formed. And making the model operational can draw neatly from existing approaches to attribute importance measurement.

Figure 13. The Kano Model.

38

Prospects & Potential High-Technology In South Korea, the new wave of small high-tech businesses have overtaken the old “chaebol” - large firms like LG, Hyundai and Samsung to become the bedrock of the country's recovery from the Asian economic crisis.12 Talk about prospects and potential in high technology in South Korea, actually it is can be savior of the nations because of Asian economic crisis in 1997 and also in global financial that impact to South Korea’s ekonomics systems in 2009 and so later on. High-tech gives some solution to South Korea’s government to solve the financial problems, the technology should be build in any sectors likes transportation, aerospace, microelectronics, IT and so on. South Korea can sale their technology along with their rivalry with the japanese. With high-tech, South Korea can earn so many profits to re-build their economics. In the future, South Korean peoples wish that they can re-unite with their “old siblings”, North Korea, as we know that their has so many problems in borders, military, politicals and history. High-tech can be some solution by supplying good technology for North Korea and have any agreements in political and social issues. Then also to have their strong security, South Korea can increased and providing thier own military systems, by operating good satelite security, military instruments and also nuclear powers as well as North Korea. Writer believes that South Korea still a Asian Tigers although many country try to develop themselves such as Malaysia, India and Thailand, 12

Data accessed on http://www.altassets.com/casefor/countries/2001/nz2966.php, April 18. 2009.

39

but the domination of “tae-guk” spirits always put South Korea as leading country in Asia that have great oportunities in High-tech along with the Japanese.

Commentary In writer perspective, South Korea is the develop country in Asian Area and also leads in technology and economics along with the japanese. South Korea’s Government gives excellent regulation for research and development, also in services and high-tech. In this paper, writer tell about services, especially in banking services. Public need to be feel safety when they are saving their money, with a sophisticated facilities, easy platform, etc. To serve best quality in banking services, some bank should learn about managing their quality, it can be in ISO 9000 or in Total Quality Management (TQM). Then about high-tech, South Korea has lead the business with Samsung domination in market. Again writer say that South Korea should maintain their position along with their rivalry with the japanese, Sony. After all, we will see about a develop country that will “smack” the world with their technology combination with services, South Korea will do that in several years, Indonesia as one of Asian country can learn something about developing some sectors from South Korea, can be in agriculture or travelling, so we hope transformation from Indonesia to enter the global market.

40

Conclusion This paper has looked at the importance of service quality with regard to tangibles, reliability, responsiveness, assurance, and empathy. It also describes and evaluates the delivery of exceptional service quality in order to meet customer expectations. This is in relation to understanding customer

expectations;

service

quality

specifications;

employee

performance; managing service expectations; moments of truth and the Kano model, which relates to threshold characteristics, performance characteristics and excitement characteristics. Second, this paper has explained about high-tech invasion from South Korea, as one of asian four tigers, they put themselves in market at globally, to ensure that technology that they build can help humanity to living.

41

Sources Books Daim, Tugrul & Fujiwara, Tetsuro. 2007. Symposium on “Technology Management in The Service Sector”. PICMET 2007. Heizer, Jay & Render, Barry. 2008. Operation Management. Ninth Edition. Pearson International Edition.

Websites 

http://en.wikipedia.org/wiki/Hynix



http://en.wikipedia.org/wiki/Samsung



http://en.wikipedia.org/wiki/South_korea

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http://en.wikipedia.org/wiki/Service_(economics)

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http://www.altassets.com/casefor/countries/2001/nz2966.php

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http://www.bharatbook.com/Market-Research-Reports/South-KoreanBanking-Industry-Analysis-2007-2011.html

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http://www.businessteacher.org.uk/free-managementessays/service-quality-management-essay/# 42