Kakao in Korea: Increasingly Shaking the Market
Abstract
Kakao is a fast growing software company focused on providing innovative smartphone applications. The company is rooted in the Korean mobile communication market where customer demands for high speed connectivity have been growing sharply. Kakao maintains the top position in the category of mobile communication utility tool for the last three years and competes successfully with other new comers.
However, the company faces tremendous external threat from traditional smartphone carriers, SK Telecom, KT and LG U+. Those telecommunication conglomerates view the rapid growth of Kakao as a dangerous possibility that may deprive them of revenue streams from their traditional cash cows of texting and voice calling. Moreover, traditional software champions, Naver and Daum, steadily expand their market shares by differentiating themselves. Those competitors have strong brand assets, innovation capabilities and market sensitivity.
After three years in the mobile software market, Kakao faces constraints to its growth potential. Kakao tries to overcome the situation by positioning itself as a new mobile platform leader that connects potential customers and game publishers. In addition, the company wants to speed up innovation for sustaining its reputation through a financial transfusion from external investors. Instead of choosing an easier option of being merged or acquired, the company clearly sets its course to fight against external challenges. How can Kakao overcome the difficulty and sustain growth? What kind of strategic choices can be executable?
This case was prepared by Professor Jinsoo Park of Seoul National University and Assistant Professor Taekyung Kim of the University of Suwon as a basis for class discussion rather than to illustrate either an effective or ineffective handling of an administrative or business situation.
