MRO firms should win orders from non-stakeholding companies

December 28 2006

Maintenance, Repair & Operation (MRO) suppliers are expected to strategically target non-stockholding companies, distancing themselves from past growth strategies which relied heavily on orders from stockholding companies.

This is because MRO firms have come to realize that although the major MRO firms such as iMarketKorea (major shareholder: Samsung Group), Serveone (LG Group), EntoB (POSCO, KT), KT Commerce (KT), KeP (KOLON), MRO Korea (SK Networks) have up to now focused on establishing a firm foundation based on orders from their major shareholding companies, in the long term, it is their ability to land orders from non-stockholding companies that will determine their competitiveness.

Man-Young Hyun, CEO of iMarketKorea explained, "The business model for MRO firms is diversifying, as can be seen from iMarketKorea's landing of procurement orders from the government this year. This proves the function and role of the MRO model."
The nature of procurement services provided by MRO firms makes it difficult for client companies to place orders with MRO firms other than ones that they are already affiliated with. Thus, it is true that MRO suppliers have developed based on orders placed by stockholding companies or affiliates, but as the industry has seen a growth in scale, and MRO companies have become equipped with item supply know-how and logistics capacities, moves to secure orders from non-stockholding companies has become more visible.
Although revenue earned from orders placed by non-stockholding companies accounted for only 15% of its total revenue, iMarketKorea aims to increase this figure to 20 < 25% next year. In 2007, iMarketKorea will focus on expanding its client base in the chemistry, retail, automobile, steel, and electronics sectors.

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