Hyundai Motor Company(HMC) is a Korean automaker which along with Kia, which was acquired in 1998, comprises the Hyundai Kia Automotive Group, the world's fourth greatest automaker by 2009. Chung Ju-Yung founded the Hyundai Executive and Engineering Company in 1947, HMC was later set up in 1967. By 2009, it is the world's quickest growing automaker. In 2008, Hyundai (without Kia) placed as the eighth largest automaker. Headquartered in Seoul, South Korea, Hyundai works the world's major integrated automobile manufacturing unit in Ulsan, which is capable of producing 1. 6 million products annually. The company employs about 75, 000 individuals surrounding the world. HMC vehicles can be purchased in 193 countries through some 6, 000 dealerships and showrooms worldwide. In 2010 2010, Hyundai sold over 1. 7 million vehicles worldwide.
Distinctive competence
HMC's distinctive competence is its capacity to produce its models using its own technology. The company's first model, the Cortina, premiered in cooperation with Ford Motor Company in 1968. When HMC wanted to develop their own car, they chosen George Turnbull, the previous Managing Director of Austin Morris at English Leyland. He subsequently hired five other top British isles car designers. In 1975, the Pony, the first Korean car, was released, with styling by Giorgio Giugiaro of ItalDesign and powertrain technology provided by Japan's Mitsubishi Motors. However, after many years of in-depth research and development, HMC started to create models using its own technology from 1988 you start with the midsize Sonata. While other domestic motor companies such as Kia in those days still relied on overseas companies like Ford or Mazda, HMC's self-reliance of technology was and still is a strong distinctive competence.
Scope of operations
The opportunity of operation of HMC is significantly extensive across numerous regions of the world. Its first export is at 1976, using its first Korean car Pony, to Ecuador and soon to the Benelux countries. Through the next years, it exported small small vehicles such as Excel to Canada and the US and gained huge success. The US market continues to be increasing and growing as the Europe market continues to be in the starting level though it has achieved some success with the i-series. China and India are also attractive marketplaces for HMC with the increase of demand on cars with the introduction of the market in those locations. Other emerging marketplaces such as Africa-Middle East & Latin America are achieving consistent sales size growth through the years. Currently, HMC has creation plants in the US, China, India, Czech, Turkey, and Russia which began performance from 2011. The global demand of Hyundai's vehicles is increasing every year (2010:70, 143 2011:74, 901) and fulfill the demand, its production capacity of abroad vegetation is increasing as well (2010:1, 882 2011:2, 070).
Resource deployment
Given that HMC will compete in the above regions with others, tool deployment varies among geographical parts with certain product lines. THE UNITED STATES market shows increase in demand for small and middle size vehicles alternatively than big size SUVs. Therefore, HMC will give attention to get together the demand on these vehicles. In the Europe market, regardless of the declining industry demand, market shares have increased scheduled to new models like the i-series (2007:1. 8% 2009:2. 4%) which leads the company to determine direct sales subsidiaries to increase sales momentum in key marketplaces. The China and India are attractive markets because of the growth in economy which will normally improve the demand of cars. HMC will give attention to optimal dealer syndication to fully capture fast growing demand from small & medium places in China.
Synergy
The motor vehicle industry is a hardcore capital-intensive mature sector. Heavy set costs are necessary for R&D, so getting a bigger size is inevitable. In 2008 HMC (including Kia Motors and all of its subsidiaries) get ranking fifth in the world's automakers, before Honda. HMC and Kia Motors dominate Korean car-making ability with 75-80% local market share. As an organization level, they export to 200 countries, mostly from Korean facilities. Local capacity is 1. 83m models for HMC and 1. 4m for Kia, with a standard 40/60 home/export divided(as of 2010). HMC includes Kia, Mobis, Hyundai Metal, Hysco, Glovis, and Hyundai Capital among others.
After merging with Kia motors, HMC successfully launched its R&D center's integration and openly shared its manufacturing programs and components. On behalf of its successful post merger integration, HMC's sales physique is leveled off after topping out this year 2010. Kia, which is positioning its brand imagine as strong and innovative, is taking a different brand positioning from HMC. Up to now, their brand placement gets along quite nicely.
With the recovery of world demand in motor vehicle sector, for the most of its player including HMC group, it is time to endure as the major player, or to lose its talk about and fade. It is positive that both their export results of finish car and outside Korea's capacity are increasing. With the start of Russia plant's creation, Hyundai steel and newly joined subsidiary, Hyundai construction, it is anticipating that there is a much room to produce a sales leap with the momentum is keep inspired.
SWOT Analysis
Strengths
Weaknesses
-Dominant local presence in Korea, a way to obtain less competition and therefore higher margins
-Quality service across 1036 cities, Inside the J. D. Power CSI Study Hyundai scored the highest across all 7 parameters
-Leading global automaker in "Chindia" in conditions of their blended existence in India (19% show) and China (6%)
-Have done a fantastic job in enhancing technology / quality of the line-up, and in recent years the designs are also improving
-Lagging Japanese on hybrid technology, looking to roll out their first cross dedicated model in 2012, similar to Toyota's Prius, although question grades over the profitability of such in preliminary years
-Dominated by family possession, so likely that MK Chung's boy is groomed to load the Chairman role. But MK Chung is notorious for his embezzlement in early 2007.
-Higher visibility in product price risk due to changes in prices of inputs such as metal, metal, plastics and rubber, which go into the creation of automobiles
Opportunities
Treat(Risk)
-Strong existence in Chindia, but use to be strong in Russia, but experienced a setback when govt imposed more import fees, the new home Russia plant likely helps build up their Russian franchise
-In last few years, company led the expansion in the passenger car sector. In north America market, their sales information is soaring by changing Canadian syndication chain from 65% "exclusive" retailers to near 100%(Changed Canadian market-share from 5% to 8. 2% in last 2 yrs), and also working to improve this in USA
- Currency is often a risk. Hyundai is exposed to the potential risks associated with fluctuations in forex rates mainly of import of components & raw materials and export of vehicles. (currently it is their favour)
-The motor vehicle industry is very capital intense. Such investments need a certain level of operation to create viable results. Merge with the Hyundai development could be a dangerous event, which prevent further capital shot in motor vehicle industry.
Analysis on Car Industry and Hyundai Engine Company
Configuration and Coordination Analysis
Configuration
HMC is one of the very most multinational companies on earth. It is currently operating in 193 countries that happen to be widely distributed throughout Asian Pacific, European countries, Middle East, Africa, North America, and Central & South America. You will find nine types of operating departments: head office, Regional head office, Regional Office, Distributor, Overseas Subsidiaries, Overseas Sales Subsidiaries, R&D Center, Creation Facilities, and CKD Set up Facilities.
International cost differences
In Asia Pacific and Europe, the majority of the functions listed above exist due to the maturity of the auto industry in these parts. Therefore, in conditions of transportation, the price would be relatively low since transfer only occurs within the continent. However, in Europe, wage rates are relatively high which could result in a global cost difference.
In Middle East, Africa, and Central & South America, the majority of the functions which exist are vendors with one local headquarter and a couple of CDK set up facilities in each continent. This means that they can be importing auto parts, not the final products, and assembling them locally. This could result in relatively low priced since importing parts is less expensive than importing final goods and assemblage facilities are smaller in size than actual vegetation. Furthermore, these areas have low wage rates which also lead to low priced.
North America is an extremely special case since it does not have vendors unlike most parts of the earth. Instead, they have two regional offices, two R&D centers, two international subsidiaries, and two overseas sales subsidiaries and one production facility. This demonstrates the countries in THE UNITED STATES are focusing on research and international business strategies and producing final goods locally. Therefore, maybe it's implied that their reliance on headquarter in Seoul, Korea is relatively low and they are concentrating on their own operation. Such localization would bring about high cost and income rates in THE UNITED STATES are also high.
Business environment
Since HMC is working in 193 countries, it encounters different business environments throughout the world. However, there still are some main business surroundings that have large influence upon HMC. Included in these are strict legislation on trade and international business in a few parts of the planet, such as China, instable overall economy and politics in Middle East and North Africa, and the most up to date problem of Japan's large tsunami. HMC could face some challenges in such surroundings. On the other hand, the auto industry continues to be a very adult and steady one across the world and there are opportunities in rising marketplaces such as China, India, Russia, and Brazil.
Cluster effects
HMC is extensively spread out across globe and operating in the majority of the countries; however, level of attentiveness in each country is not similar. Currently, the business is concentrating on China, India, and Russia that are growing markets and also have high probable and america which has shown steady growth anticipated to recent restoration from the financial crisis. On the other hand, in Middle East, Africa, and Central & SOUTH USA, the focus is very little and the company is relying intensely on distributors instead of direct proposal.
Digitization of products and services
HMC has shown great attempts to follow the pattern of digitization in its products. The business is offering various options and displaying cars operating online. However, as a result of nature of the merchandise category, such digitization in products was limited. Nevertheless, in services, HMC has modified use of cultural media which include facebook, twitter, and websites to better communicate with its consumers.
Economies of Scale
Since the products and the parts are uniform and universal in every area of the world, there is high need for economies of size. To accomplish economies of scale in order to reduce cost by mass creation, HMC has formed an alliance, and realignment, with DaimlerChrysler which is a German car firm with large resources.
Customer needs
There are extensive factors behind customers' different needs in different countries. Among these factors is the country's economic status which could result in choice for cheap or top quality vehicles. Also, another factor is the development of infrastructure and open public transportation that could result in the occurrence of using cars. Moreover, customers in several countries have different needs and wishes for designs, functions, benefits, and so forth. Therefore, there exists high need for achieving different customer needs in various countries.
Coordination
By having regional head office in each continent, HMC shows initiatives towards coordinating global activities.
Operational obstacles
In terms of operation, HMC needs to package with different surroundings in different parts of the world. In order to overcome these functional obstacles, HMC has received advice from organizations that have specific experience in each field. For example, to better offer with various obstacles in logistics, HMC gets advice from Glovis, which is a logistics firm part of HMC.
Cultural differences
Even though the products of HMC are very uniformed across the globe, there still exist needs to adapt to cultural differences in various countries. These include different use of automobiles, different frequencies of using autos, different tastes for car types, and so on. Moreover, not only products, but also services and marketing techniques need to reflect such ethnic aspects. HMC has to take into consideration of the type of services customers value and what marketing method would succeed in each country. As a result, there exists high need for coordination of different ethnicities throughout the countries where HMC is procedure.
Generation and copy of knowledge in global subsidiary networks
The charts (see Appendix) show the organizational structure of HMC. The darker colored divisions represent those that offer with international business of the business. Especially for China, there exists Chinese Business Department specifically suitable for this country only. Moreover, as mentioned previously, there reaches least one regional headquarter in each continent that directly reviews to headquarter in Seoul, South Korea or provides information to other countries. Therefore, since there are divisions which provide cable connections between international divisions and the house country, or even among international divisions themselves, it can be assumed that there is high generation and transfer of knowledge in global subsidiaries.
High Foreign Investment with Extensive Coordination among Subsidiaries
Through the examination of configuration and coordination of HMC by each determining factor, it can be concluded that both configuration and coordination of activities are high. Thus, on the matrix, HMC is positioned in the upper-right area which signifies high overseas investment with considerable coordination among subsidiaries.
Global Integration-Local Responsiveness Analysis
When choosing the primary international business strategy, there are countervailing causes: global integration and local responsiveness. Company must first think where it is positioned, and then analyze further to choose the right strategy.
Global Integration
Globalization of markets
People buy autos mostly for means of transportation and they favor those having high quality. Therefore somewhat, HMC can lessen costs and take full advantage of benefits by producing similar products. For instance, compact cars are in fad, so HMC is also concentrating on producing these cars.
Globalization of productions
For a car company economics of scales is very essential. Through having economics of scales, company can reduce its development costs. HMC also offers some stresses for achieving economics of scales which pressure goes more robust when the business wants to develop its business internationally.
Local Responsiveness
Customer Divergence
Differences in culture, national attitudes, and financial and utilization conditions are also critical indicators that HMC must consider when it penetrates foreign market. For example, people in America prefer SUVs since they emphasize the capacity an automobile has. In India, people prefer compact cars that happen to be well matched to their current economic status. Thus HMC has to focus on SUVs when it would like to improve its sales in American market but also for Indian market, HMC should put focus on selling compact cars.
Host Administration Policies
Different countries have different restrictions for a car industry. Some has advantageous situations for international companies but others do not. For instance Chinese government is currently alleviating its rules to encourage vehicle production in China. Therefore HMC has made Chinese language Business Division hoping cost lowering and sales increase.
Transnational Strategy
As we have reviewed above, HMC is positioned in the upper-right aspect. It seeks the great things about global scale efficiencies and the great things about local responsiveness. Thus HMC is currently using Transnational Strategy.
Emerging Market_Industry analysis
Recently, the automobile industry in growing marketplaces, such as China, India, Russia, and Brazil shows a high growth rate. Especially in China and India, the income in these growing markets have reached its maximum by the end of 2010. In addition, although much less dramatic as in case of China and India, Russia is also progressively increasing its prospect of an attractive car market as more regulations and marketing strategies are designed. Furthermore, in 2010 2010, Brazil has established itself as the fourth most significant car industry after China, the US, and Japan. As a result, many car companies show a trend of focusing on these new emerging markets
Emerging Market_Company given analysis
Diversifying the markets to appearing countries
According to the HMC's sales performance over the world, sales from emerging markets are highly roared during modern times. As well as the populace of rising market is large enough to aid future sales potential, the economic expansion rate is getting high in the countries like China, India, and other countries in East Asia. Among the durability of HMC is the fact they have highly diversified markets compared with other peer company like Toyota, Honda etc. These diversified marketplaces are one of the key reasons that HMC can be better off during the global economic problems.
Chindia Market
Market attractiveness
Chindia, which means the mixture of China and India, is world most attractive market in any industry present times. HMC has already established its production vegetable both in China and India, while its demand for HMC car boosts as well.
Demand sustainability from economic growth
As China and India both have highly growing current economic climate, the demand for car is favorably correlated with market. Based on the company study, the demand development rate expected in the Chidia market is above 10% for quite some time from now. THE ACTUAL in Chindia market must be a major part of HMC's future sales performance.
Dealer syndication for small and medium locations.
HMC has generated its sellers in small and medium metropolitan areas to fully capture fast growing demand from these cities. Automobile industry demand by region demonstrates the growth rate of demand in small-medium locations is dominating that of large locations.
Middle East, Africa, and Latin America Market
Market attractiveness
As growing numbers of population can afford to acquire their own car resulting from developing economy, Middle East, Africa and Latin America are actually very potential market for any industry. To capture these growing utilization, HMC have invested in emerging market in growing countries by diversifying the market structure.
Growing Sales volume
As HMC expected from these appearing market at the initiation of their investment, the sales have been increasing progressively for several cycles. The amount of sales from these marketplaces is not as much as those of from US or Europe market, but the growth rate is much higher than matured markets.
Types of car_Industry analysis
Across the world, especially in South Korea, India, and the United States, sales of compact cars show significant increase due to high oil prices. Firstly, Inside the 2011 Detroit Show organised by the North american Big 3 (GM, Ford, Buick), the new models that were introduced were generally small and small automobiles. This focus on compact cars is necessary not only to focus on the American market, but also and moreover, the market segments in producing countries. Second, the high expansion of the Indian car market, which is one of the most attractive markets as of now, was mostly due to high sales of compact cars. Moreover, this trend is also obvious in the Korean market as the sales of compact automobiles and semi-middle-size cars have shown a superb growth.
Types of car_Company given analysis
Variety of vehicles from Hyundai Motor
HMC has made a whole lot of car models ranging from compact-sized car to luxurious sedan, or SUV. The interesting this is the fact that, the car model shows the consumers' personal preferences or affordability to an automobile. HMC presently has about 10 representative car models internationally; Accent, Elantra, Sonata, Azera, Genesis, Equus, Genesis Coupe, i-series, Tucson, Santa-Fe, etc. To capture various likes of global needs, HMC has been efficiently developed its customized model. As increasing volume of new models are launched or will be launched in a time, HMC has been proven to more consumers around the world.
Different demand set ups among the markets
Interestingly, one big successful model in certain market does not ensure consecutive success in another market. For example, Elantra and Sonata are dominating models in American markets among HMC's car, which means Us citizens prefers sedan-type automobiles. In European market, however, the full total sales of these sedan models is nearly less than 5% of sales of US market. In contrast, a great deal of European consumers have chosen i-series which is hatchback model. By growing more autos those are more popular than other marketplaces, Hyundai Electric motor can be accepted well weighed against past when they only viewed only few models. With these different market tastes, HMC launched new sedan model in U. S. markets, while they launched new i-series model in European market.
Global Production System_Industry analysis
As vehicle industry expands internationally, each company is wanting to build its place in the web host country. Having globalized seed brings several advantages to the auto company: 1) low or even no tariff, 2) glocalization, 3) low effect of exchange rate, 4) cost performance, 5) high quality. Thus many companies are building their flower overseas. For example, Volkswagen is likely to build a flower in Chattanooga, Tennessee to boost its sales in the us relating to Volkswagen's 'Strategy 2018' and Toyota will build new plant life in China and Brazil to create compact cars.
Global Production System _Company specified analysis
International Developing Plants
HMC grows consistently with sales as well as demand, which is resulted from the enlargement of overseas flower. Growing part of HMC's total creation is produced from the plant in international countries, not in domestic. By build international creation system throughout the world, it permits company to produce efficiently along with demand from near by market segments. As the global demands fads are various from market to advertise, HMC can move flexibly by producing from local manufacturing system.
Increasing range of overseas plants
HMC now has 5 overseas manufacturing vegetation and the one in Russia is going to start producing cars from 2011. Weighed against early on 2000s, now HMC has enough capacity to meet its global demand and along with increasing demand, HMC keep buying increasing its capacity around the world. Not only in U. S. market and Europe market, but the appearing market like Chindia or Middle-East can be covered by plant life in China, India and Turkey.
Recommendations
As advice for future international strategies of HMC, we focused on examining the automobile industry pattern and countries which may have high probable of success.
Future auto industry Trend
The auto companies have gone through higher level of globalization due to globalization of the industry. However, relating to Korean Car Industry Research Middle, the longer term of the industry will show cool features. They expected that in 2020, the globalization of vehicle companies will reach its highest point and there will be no further need for globalizing the companies. Instead, the main concentrate will be shifted to growing environment-friendly autos, such as cross types cars, and smart vehicles that can provide more much better functions.
Therefore, among the leading automobile companies on the planet, HMC should fully and quickly adjust to these changes in order to be competitive in the forex market. For environment-friendly autos, HMC should give attention to reducing the use of essential oil by substituting the gas with other resources such as electricity and solar warmth. HMC happens to be putting efforts in this field, but the focus should become more emphasized due to the fast changes in this industry. Furthermore, due to the growth of technology, nearly every device, such as cellular phone and television, is now 'smart, ' and car is not any exclusion. Thus, consumers will seek for more intellectually developed functions other than basic functions of a car. Consequently, cars need to be 'smarter' and HMC also needs to adapt to this change in the automobile industry.
European Market
Europe is well known for its high acknowledgement in the eco-friendly field. Various products that are used in everyday lives such as cleaning soap, bags, toys and games could be easily within eco-friendly versions compared to other parts of the world. Not merely in products, but countries such as Spain, UK, and France are also well-known for their efforts in eco-friendly architecture as well. Such understanding and factor of the environment could be used for HMC in marketing eco-friendly cars such as cross or electronic cars in the European countries region. It really is evident that 'green' vehicles cannot receive much welcome from the presently increasing countries such as China or India because the price of them are noticeably high in comparison to other available vehicles. However, most of the Europe has already developed to a stance in their economies which obviously leads their focus on caring for the surroundings. Under these circumstances, marketing eco-friendly autos in European countries could be HMC's promising next move.
HMC car is a vehicle that uses two or more distinct power sources. The term mostly refers to cross electric vehicles (HEVs), which incorporate an internal combustion engine motor and a number of electric motors. In comparison to previous cars, HEVs have higher gas efficiency and engine unit performance. Probably the most distinctive feature of HEVs is that it's environment friendly.
Source :http://blog. naver. com/lyj8004?Redirect=Log&logNo=30083545142HMC has 'BlueDrive' strategy, and lately HMC is highly focusing on producing Hybrid automobiles. It includes produced two hybrid automobiles, AVANTE LPi Hybrid and SONATA Crossbreed in 2011.
1. AVANTE LPi Hybrid
Engine
-1. 6 LPi Engine
Maximum output
114ps
Maximum Torque
15. 1kg. m
Maximum Horsepower
134 horsepower
Fuel Efficiency
17. 0/l~17. 8/l
Key Features
Li-ion Polymer Battery
2. SONATA Hybrid
Engine
Theta() 2. 0 Engine
Maximum output
150ps
Maximum Torque
18. 3kg. m
Maximum Horsepower
191 horsepower
Fuel Efficiency
21. 0km/l
Key Features
111g/kilometres Carbon
Emissions, EV model
In European market, HMC hasn't launched any crossbreed vehicles up to now despite of Europeans increasing interests for eco-friendly autos. But, in local markets or North American market, Hyundai began its eco-friendly car sales. As Western european market has great probable in cross car market, HMC's next concentrate on for its eco-friendly model should be at European market. The leading company in the Cross vehicle sector in current Western market is Toyota. As Japanese company launched eco-friendly model early on, Toyota and Honda, as a leading automobile company in Japan, keep great part of market shares in European countries with several cross car model. Accompanied by Japanese company, other local companies like Mercedes Benz, BMW, and Volkswagon, etc. began to launch cross types model in Western market. Currently, HMC released new i-series models to capture the increasing demand on Western hatchback style vehicles, but nonetheless couldn't unveiling any cross model in European market. So if HMC develop cross types i-series model, it's rather a competitive model to other hybrid model.
Latin America Market
In Latin America, Brazil would the most likely country to improve up the amount of concentration, build-up an actual place, getting ready to face the competition and balancing the local responsiveness. Since Brazil's high growth rate and establishment as the fourth greatest car industry for HMC, relying drastically on distributors currently second should be evolved in to a direct engagement to become more highly concentrated that are one of the weaknesses that HMC might face in the foreseeable future at Latin America. Also building an actual place is very beneficial and necessary, since it decreases the tariff, glocalization, low effect of exchange rate and cost efficiency which wouldn't normally only improve its sales in Brazil, but throughout Latin America. To add more, lowering its international cost difference by establishing the actual place not only gets the effect of improvement of sales, but stability of the genuine seed itself domestically. Domestically stabilized genuine seed in Brazil would bring new distribution stations throughout many countries in Latin America. Major competition, Toyota is also likely to build-up a herb in Brazil to create compact vehicles and HMC should be ready to remain competitive it's rival by examining the new growing markets right now with studying the potential growth of compact vehicles in Brazil before more opponents go into the same emerging market forseeable future. Lastly, balancing the neighborhood responsiveness meaning to analyze the customer divergence to fit the sort of car(compact vehicles in Brazil) and should launch a fresh model focusing on Brazil markets to fulfill the several demand buildings that the clients favor as the first rung on the ladder onward of its expansion in Latin America.
Conclusion
Since it has generated in 1967, HMC is continuing to grow up as a leader auto company in Korea, and world's fourth most significant car producer consequently of their globalization strategies. We've analyzed HMC with some theoretical methodologies including SWOT research, Configuration-Coordination evaluation, and Global integration-Local responsiveness analysis. Based on these strategies, what we have found are HMC should go well with not only in domestic market, but in overseas market segments by diversifying its market, which range from US, European countries, to prospective growing markets. With regards to developing system, HMC's international plant life are spread over the world, which enable useful global supply chain.
In some aspects, however, we've also found that HMC need to check its strategies to follow with global vehicle industry and take more market stocks. So we suggested some strategies in advice part based on these types of issues that HMC faces currently. One unique issue in car industry is environment-friendly autos such as hybrid car and smart car. To meet up with these global changes, HMC seems to need more effort to develop its new-technology vehicles in near future. Choosing this global development, Western european market is highly attractive market for hybrid car where people are a lot more thinking about environmental problem than the areas. Another the one which we recommended is Latin America market. We pointed out that HMC does not have its manufacturing systems near Latin America compared to other emerging market segments. In order to capture growing needs on car, HMC have to be prepared to reply in the future.
Appendix
Organizational Framework of HMC
Source: Stanford Graduate Institution of Business, Hyundai Motor unit Company, Nov 14 2003.
Source: Stanford Graduate School of Business, Hyundai Electric motor Company, Nov 14 2003
