After Bold Summer Greeting, First Management Team Ordered to Prepare Mid- to Long-Term Plans
Urged to Consider Core Businesses by Subsidiary... Expectation of Streamlining Overlapping and Marginal Businesses
[Asia Economy Reporter Lim Hye-seon] Shin Dong-bin, Chairman of Lotte Group, who has been staying in Japan for over a month, has ordered the group's key executives to "establish a 10-year grand plan for Lotte within this year." This is expected to have a significant impact within the group as it is the first task given to the management since the unprecedented summer personnel reshuffle last month, calling for the preparation of a new mid- to long-term plan.
According to the business community on the 10th, Chairman Shin instructed during the weekly meeting held via video conference on the 8th, "Please establish a new mid- to long-term plan that will lead Lotte's growth for the next 10 years." Currently, Lotte is a leading company in the industry, but it is interpreted that Chairman Shin expressed his view that the response has been insufficient in the rapidly changing situation caused by the COVID-19 pandemic. In particular, it is said that he conveyed the urgency of closing down unprofitable businesses in the core sectors of distribution and chemicals and finding new growth engines.
Chairman Shin said, "Lotte is a leading company, but the goals of the affiliates are unrealistic and focused only on short-term performance," and ordered, "Please include in the mid- to long-term plan the impact of COVID-19 on the industry and specific countermeasures and plans." After the summer personnel reshuffle, Chairman Shin had already directed innovation centered on the CEO to respond to the 'post-COVID' era.
In particular, Chairman Shin urged the heads of each affiliate, "Please reconsider and clarify what the core business of each affiliate is." There is also an analysis that after establishing mid- to long-term business plans in line with the post-COVID era, adjustments to overlapping business areas and the disposal of unprofitable businesses within the group will follow. He said, "In the whirlpool of change, core competencies that will firmly support the company are necessary," adding, "We must not be bound by existing business areas, but efficiently innovate the existing business structure and find our own strengths that can lead the market."
The business community expects that since Chairman Shin has taken decisive action and personnel reshuffling to overcome the crisis, those lacking the capability to lead the 'New Lotte' will be quickly replaced. A senior executive at Lotte said, "Establishing the mid- to long-term plan will be a key task for managers in the second half of this year."
Chairman Shin's recent moves are interpreted as stemming from a sense of urgency that Lotte Group will be left behind if it does not change. This is because it is judged that the rigid corporate culture and habitual work practices of the existing Lotte make it difficult to keep pace with the rapidly changing management environment. The fact that Chairman Shin was the first to start working from home once a week and began directing Japan and Korea simultaneously through video conferences is in the same context. A Lotte official said, "(Chairman Shin) is checking overseas sites through video conferences while working from home." Chairman Shin, who has been staying in Japan for the past month, receives business reports from affiliates every Tuesday via video conference. Accordingly, affiliates such as Lotte Holdings, Lotte Shopping, and Lotte Chemical are actively adopting video conferences.
Along with structural reform, efforts are being made to secure financial soundness to build a solid Lotte Group. This year, Lotte Group has been securing cash by promoting sale-and-leaseback transactions and corporate bond issuance. Since Chairman Shin expressed his intention to expand global business centered on the Americas and emerging growth countries from the beginning of the year, there is also speculation that after active restructuring, bold mergers and acquisitions (M&A) will follow. A business community official explained, "Chairman Shin's management style is to secure cash to strengthen the group's financial soundness while preparing seed money to grow companies through M&A."
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