A view of the Lotte World Tower, Korea’s highest landmark skyscraper. (Photos: Lotte Group)

Lotte Group Chairman Shin Dong-bin

Lotte Group Chairman Shin Dong-bin said, “(We have to) be thoroughly prepared with future predictions and each situation for our survival, and Lotte also should innovate to the extent that the conventional business mode could eventually break.”

This year’s first CEOs meeting, dubbed “Lotte Value Creation Meeting (VCM),” took place at the Lotte World Tower in Seoul on Jan. 23. At the event, Chairman Shin stressed that business transformation is essential for survival.

The Lotte VCM took place with about 100 group and subsidiary executives, including Vice Chairman Hwang Kak-gyu, in attendance. Chairman Shin presided over the CEO meeting for the first time in about one year. Vice Chairman Hwang carried on the job instead of Chairman Shin, who stayed away from management during the second half of last year. Chairman Shin set this year’s business buzzword as “daesangmuhyeong,” a Chinese saying that means the establishment of global growth strategies in an unpredictable future.

In his New Year message, Chairman Shin emphasized business transformation and called for working out detailed action strategies. If and exact vision and detailed action plans are not explained, they will bring about a serious crisis,” he warned. He urged participants to carry out actions varying according to each situation.

Chairman Shin stressed investment guidelines for working out growth strategies. He pointed out the group’s tendency of missing investment opportunities or taking a “lukewarm attitude” by making transient investments. He also alluded to rationalization of sagging businesses. He called for focusing on keeping on innovating for the future and on business areas deemed to have sustainable growth.

The group’s distribution subsidiaries failed to post satisfiable business performances. Lotte’s duty-free business saw its domestic share drop 7 percentage points to 35 percent last year, while Lotte Chilsung Beverage suffered a setback in the beer-making business. Lotte Shopping, the group’s flagship business, also recorded a sagging off-line operating profit.

Shin urged his executives to turn to be more aggressive in exploring new business areas, particularly executing of digital transformation. Compared to global companies, he said, Lotte needs to raise its investment rate and the group should come closer to customers by expanding its own big data, off-line outlets and logistics infrastructure.

Besides, Chairman Shin called for investing for securing manpower for the preparing for the future. He urged his executives and staffers to create a corporate culture in which they are armed with a challenging spirit, saying that they need to have a sense of crisis in which taking a passive attitude and being complacent with the reality would are forced to be driven off the market.

Starting last year, the group has held the first-half VCM to help all subsidiaries share their New Year’s goals and mi-d and long-term strategies. The second-half VCM has become an opportunity for each business group to share each company’s pending issues and mid- and long-term growth strategies and explore how to explore synergetic effects among them.

Participants at the latest VCM discussed this year’s business predictions, core tasks, future business changes and countermeasures as well as the direction of growth strategies. Newly hired digital experts took an opportunity to look at in-depth look at Lotte’s current status and future direction of digital transformation.