Standardization has been a driving motto of Nong Shim for many years, especially
during the catch-up period between the 1970s and the 1990s. Knowledge
assets were important to fend off domestic competition through the localization
of goods and services. For example, standardizing the most important
universal Korean taste not only for Koreans but also for other customers in
the world was the most pivotal contribution of Nong Shim to the packaged
food industry. In 2001 a Boston-based consulting firm, Bain & Co., stated in
its company report that only three companies, including Nong Shim, have a
desirable growth pattern in Korea. This has been attributed to the fact that
Nong Shim continued to revitalize its core business through technological
innovation (i.e. standardization), instead of chasing trends. Nong Shim’s
sustainable growth and success rested on continuous innovation which helped
reduce costs by enhancing manufacturing efficiency, building flagship products
(Shin Ramyeon and shrimp crackers) and developing new products.
We can discern from this case that standardization can also be a driving
factor for success in the packaged food industry, if R&D for incremental innovation
is a core competence of the firm. However, globalization of the product
line using the same standardization strategy (i.e. global strategy) may not be
a long-term solution to increasing competition within the branded packaged
food sector where the middle-class customers are now leaning towards wellbeing
or health foods more than instant noodles. Furthermore, responding
to local demands in markets as far apart as China on the one hand and the
United States on the other is getting more important than insisting on one
universal Korean, and thus world, taste. Nong Shim knows this very well and
is now moving slowly to accommodate this new global demand and is experimenting
with high-quality and high-priced branded packaged foods with a
new multinational strategy behind this shift.