OWL Magazine Korea

“Next Frontier Marketing Strategy of E-LAND, the E-LAND Group” by Cha Ki-hyun

Recently, I came across an article about workplace bullying within the E-LAND Group. Negative news articles, including incidents like hundreds being mobilized for year-end performances, were disclosed through the news.

In reality, E-LAND has been nicknamed “Il-Land” in the job market even before. Despite rising to the ranks of major corporations, it has received ambiguous evaluations as it couldn’t match other major companies in terms of corporate culture, salary, and welfare. Thanks to this, there are stories that Samsung appreciates talent from E-LAND, and those who have worked at E-LAND and transferred to Samsung usually don’t complain about their work.

“A Book Containing the History and Strategy of E-LAND Corporation”

I first encountered this book while preparing for job hunting in my fourth year of university in 2012. As I was about to graduate, I wanted to learn about “companies,” so I came across several books containing the history of companies, including one about the E-LAND Group.

“The New Frontier Marketing Strategy of E-LAND” is a book published in 2010. It’s regrettable that it doesn’t cover the stories of the company after 2010, but it effectively captures the birth and growth process of the company.

“A Book Introducing E-LAND’s Growth Process and Corporate Culture”

This book summarizes E-LAND’s growth process, corporate culture, values pursued, and crisis management strategies.

E-LAND’s beginnings trace back to Chairman Park Sung-soo. After battling muscular dystrophy for five years, he started with a duty-free clothing store called “England” in front of Ewha Womans University. Starting from a small duty-free clothing store, E-LAND later grew into the major corporation we know today, albeit facing various trials and challenges along the way.

“E-LAND’s Way of Thinking, E-LAND Spirit”

What allowed E-LAND to grow like this was its unique way of thinking, the “E-LAND Spirit.” The E-LAND Spirit revolves around thinking not centered on oneself but on others. In other words, it means thinking from the perspective of others.

Following this is the mindset of “Think Differently,” which naturally follows when one thinks from another person’s perspective. Successful cases achieved through this approach are also introduced in the book.

The first case is the example of the duty-free clothing store “England.” At that time, targeting students residing in dormitories, they succeeded by strategically stocking clothes that students needed at the store near the school.

The second case involves “Eco Mart,” which can be described as a 1,000 won shop. Instead of selling household goods cheaply, they focused on selling “luxury items” at affordable prices, which was praised as a case of a paradigm shift.

“The Cleaning CEO”

In the middle of the book, there is a section titled “The Cleaning CEO,” which contains the experience of a person who joined the E-LAND Group.

He recalls asking an elderly man cleaning the company building for directions to the interview. To his surprise, the elderly man he asked for directions turned out to be Chairman Park Sung-soo himself, who was interviewing him.

“E-LAND’s Management Philosophy: Order, Cleanliness, Hygiene”

E-LAND has three management philosophies: “Order, Cleanliness, Hygiene.” There is a special reason behind this. When the company was growing rapidly, there was a shortage of desks in the office. As a result, several people had to share one desk, and it was necessary to maintain order to avoid losses among employees.

By the way, the system of sharing empty desks among several people is called “Hot Desk” in English.

“E-LAND’s Four Management Philosophies”

Here are E-LAND’s management philosophies:

  1. A company must make a profit, and the profit must be used properly.
  2. The process of making a profit must be honest.
  3. The workplace should be a school of life.
  4. It should be operated for the consumers.

These management philosophies of E-LAND may seem very good on paper, but considering recent cases of “E-LAND’s workplace bullying,” doubts arise as to whether the process of making a profit is honest and whether the workplace is truly a school of life.

“E-LAND Group’s Root Cause, Question Board, E-LAND Knowledge Mall”

E-LAND employees are said to carry another notebook besides their work notebooks. This notebook, called “Root Cause,” stands for “See and Apply What You’ve Learned in the Field.”

In addition to the Root Cause notebook, the company has a “Question Board.” When an E-LAND employee has doubts about something unrelated to their work, they can post it on this board. Someone in charge of that area will see it and provide a solution, and the information is then shared again for others.

Through such methods, the E-LAND Group encourages continuous learning among all employees. Ultimately, this led to the creation of the “E-LAND Knowledge Mall,” an internal knowledge database, in October 1999.

The E-LAND Knowledge Mall is a repository of knowledge using the company’s intranet, where you can access materials using a currency called “LUTI” and upload materials containing your know-how. Also, when you view someone else’s materials, your “LUTI” decreases, and when someone views the materials you uploaded, “LUTI” increases. It’s a database concept.

“E-LAND’s Reading Management”

E-LAND had already started reading management in the 1990s, which can be considered a company culture ahead of its time compared to others.

Furthermore, the E-LAND Group introduced the ERP system in February 2000, the first in the domestic distribution industry. The company’s continuous learning culture may have allowed it to adopt efficient systems ahead of others.

“Numerous Sub-Brands Launched by the E-LAND Group”

The E-LAND Group has created several sub-brands such as “2001 Outlet,” “Ashley,” and “WHO.R.U.” Even now, the E-LAND Group continues to create sub-brands by further subdividing, which can be considered a successful example of a “sub-brand segmentation” strategy.

Although we may not be aware, we can find many brands from the E-LAND Group in our daily lives. Even now, E-LAND continues to create detailed sub-brands and take on new challenges. Of course, there are brands disappearing in the process and new ones emerging.

“E-LAND Successfully Ventures into Overseas Markets”

E-LAND has successfully ventured into overseas markets beyond the domestic market. It established a Chinese subsidiary in 1994 and successfully established itself in China through a premiumization strategy in 2000.

E-LAND Kids, for example, made successful strides into the United States and even won the Best Design award in the Boys’ Outing category at the 2002 Earnie Awards held in New York City.

“Mazanine Financing Strategy”

E-LAND used systematically learned strategies in real-life situations. Among them , the “Mazanine Financing” strategy is a management strategy used by E-LAND when it acquired Korean Carrefour in 2006.

“Mazanine” comes from the architectural term “mezzanine,” but it was brought into management as a metaphor. “Mazanine Financing” refers to borrowing funds without collateral but providing stock-related rights such as preferred shares and convertible bonds instead.

In the end, as a lender lending money, it is in a vague position between shareholders and bondholders, which is where the name comes from. The lender can make a profit by selling stocks later if the company does well, or they can receive interest if it doesn’t. This financing method is commonly used by venture companies that clearly have growth potential but find it difficult to raise funds through their own credit.

“Mazanine” comes from Italian and refers to a mezzanine lounge between the first and second floors of a building.

“Sale & Leaseback Strategy”

This strategy is also introduced in the book. Simply put, it’s a strategy of “selling and leasing back.” It mainly involves selling real estate to secure cash and then leasing it back for use.

E-LAND Group has also used this strategy to secure cash and continue its business, and there have been cases where STX Pan Ocean sold two car carrier ships to Norway’s “HUAL” and then leased them back during the foreign exchange crisis. Lotte Shopping also sold store buildings in 2008 and leased them back for business.

This strategy can be seen as a way to continue business by selling a property such as a building, airplane, or ship that requires a large amount of money for purchase, securing cash by selling it, and then leasing it back.

There are also cases where this strategy is used in reverse. Daewoo Securities, for example, made profits by purchasing aircraft from Emirates Airlines and then leasing them back.

“Skimming Pricing Strategy and Penetration Pricing Strategy”

These are pricing strategies. When setting prices, deliberately adopting a high-priced strategy or entering the market with low prices are common approaches.

  • Skimming Pricing Strategy: Intentional high-priced strategy – usually for luxury goods
  • Penetration Pricing Strategy: Strategy of entering at a low price, intentional low-price policy – used to increase market share in markets where product differentiation is not severe

The book introduces E-LAND’s growth process, their values, organizational culture, and also intermittently introduces “management strategies” as seen above.

This book is not only useful for those curious about the company E-LAND but also for those interested in corporate management strategies.

“Reference Materials”

“E-LAND, the New Frontier Marketing Strategy”