POSCO’s Growth History and Stakeholders’ Interests

POSCO, the first steel company in Korea, has undergone rapid growth over the past 49 years. This study reviews POSCO's growth history using the society-partner-investor- customer-employee (SPICE) model introduced by Dr. Rajendra Sisodia in 2007. The SPICE model yields different results at each stage of POSCO’s growth, reflecting the fact that the company has focused on specific stakeholders to build a strong ecological business system. In light of this, POSCO's growth and performance are analyzed historically to determine whether the company’s focus on different stakeholders at each growth stage has been effective, and whether POSCO's current innovative customer-oriented strategy is successful in helping it recover its competitive strength.
As POSCO expanded for about 30 years from the 1970s to the late 1990s, it gained success through societal support and global partnerships. In the 2000s, POSCO expanded its business overseas and listed its stocks on foreign markets, not only to increase the transparency of its operations but also to strengthen its relationships with investors. However, the company has since been facing strong competition from China due to the global steel overcapacity. Consequently, the total debt ratio of the POSCO Group (i.e., POSCO and its subsidiaries) shot up in 2011, and in 2015, the POSCO Group recorded its first net loss since its establishment. To prevent further losses, in 2015, POSCO implemented a new innovative strategy focused on customer management and the allocation of more resources to customer-oriented marketing activities by streamlining its business and reducing its number of subsidiaries. In addition, it increased its technology exports, formed strategic alliances with global competitors, emphasized customer-oriented research, and development to meet the needs of customers. Thus, POSCO was able to record an operation profit surplus in 2016, and should manage to keep developing a strong ecological business in the Korean steel industry in the future. This focus on each stakeholder type at different stages of growth may be a good strategy for other mature Korean companies to implement.