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The Hyundai Group

Case 5
by

Mary Grace Timbol

on 27 February 2014

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Transcript of The Hyundai Group

$1.25
1987 – 1989
Vol XCIII, No. 311
Background
Time Frame: Year 1987– 1989
STATEMENT OF THE PROBLEM
SWOT ANALYSIS
Main Problem:

Hyundai Group adopted and had been into practice the authoritarian style of management. Without taking into consideration the fact that during the last two decades of dynamic growth in operations; their management style hindered the evolution.
Secondary Problem:

1. With the rising competition and swelling demands from Korea’s more independent youth generation, Hyundai’s strategies of low wages and hard work were no longer effective.
2. The reported labor rebellion at Ulsan that were participated by 2000 Hyundai worker since December 1988.
3. Hyundai started to move away from Korea’s slumping construction and shipbuilding industries and faced troubled transition to a high-tech, hig-waged future.
- part of South Korean Chaebol
- largest automobile manufacturer
- by Chung Ju-Yung
- a company producing reliable and stylish automobiles
- acute labor problem when Southeast Asian crisis struck the company
- financial problems and to survive
- they cut its labor force
- harsh years of military dictatorship
- economic boom
- management style
- several labor strikes
- strategy of low wages and hard work were no longer suffice
- employees viewed the owners’ style as authoritarian
- created an image that was unwilling to change with the times
STRENGTHS:

1. crews at work are like disciplined, para-military, single-minded, self-sufficient machine
2. Working fourteen-hour shifts and seven-day weeks, the construction crews do their faster than anyone else.
3. Hyundai Chairman’s audacity, determination, and imagination remained to be a trademark of the man as the financial stakes multiplied.
4. wide range of products
5. low cost of production thereby low-priced products.
These opportunities lead the Hyundai to:

a. Consistently landed major civil contracts and Chung became one of the privileged business leaders;
b. Became one of the largest construction companies in the Middle East;
c. Became the largest automobile manufacturer in Korea
WEAKNESS:

1. Authoritarian leadership style.
2. an image of a company unwilling to change with the times.
3. not fully committed to high-tech.
4. Hyundai had invested heavily in Hyundai Electronics, it’s semiconductor subsidiary which had been a disappointment.
5. cited as allegedly one of the most anti-labor of the large companies in Korea
The Hyundai Group
POINT OF VIEW
Chung Se-Yung/Chung Ju Yung:


Chairman and founder of the Hyundai Group of Companies. He is willing to tackle the impossible and unwilling to accept “no” from subordinates.
Hyundai Workers:


They want better working conditions and environment. They have been looked down on in Korea. They don’t have voices in management decisions and experienced erratic job schedules with lower wages.
OBJECTIVES:
To improve the management style and cope with changes along with time and address the dispute between the management of Hyundai and its workers, such that the result will provide a positive sum that will satisfy both parties’ concern.
OPPORTUNITIES:

1.The development of Korean economy through the hands of the leading entrepreneurs.
2. Emphasized the economic conditions promoting its emergence, and concomitantly, the occurrence of economic development.
3. Export-oriented industry and development of heavy industries.
THREATS:
1. The stagnation of the ratio of profits to revenue in recent years and the marginal possibility that overseas construction and shipbuilding be ever regained their former glory.
2. The collapse of oil prices and the Iran-Iraq war however choked off much that business and the prolonged slump in the world shipping severely hurt the company’s shipbuilding subsidiary.
3. U.S. pressure for the won to appreciate may reduce Korea’s competitive advantage before Hyundai could respond.
ALTERNATIVE COURSES OF ACTIONS
1. The company should retain its current style of management but they should also give in to the demands of its workers for salary increase.
Pros:
The strike would stop and the company would continue its operations.
Cons:
entail higher cost
means higher prices of its products and services
Cons:
Workers might be used to it and the company will be abused.
2. The company should retain its current management style and fire all workers who participated in the strike.
Pros:
Firing of these workers hiring new ones
could be easily managed.
Cons:
hassle in hiring new applicants or workers
Cons:
Costly training

might do this through cost cutting and could result to low quality of products and services.
Cons:
A lot of organizations would disagree
result to a bad reputation
Pros:
Discontinued incurring of losses due to strike.
3. Management should be reorganized and charged to a more appropriate and efficient management style.
Cons:
The company (their staffs and workers) might have a hard time adjusting to the newly organized style of management.
Pros:
better relationship with its workers

help the company in achieving their goals
Pros:
The current strike of their workers would stop.
Pros:
lessen the possibility of repeated occurrence with this kind of problem or a more serious one
RECOMMENDATION
Plan of Action
third alternative
4. The concerns of Hyundai that the conglomerate had failed to take advantage of the declining competitiveness of Japanese electronics products because of the strong yen.
5. The nationwide uprising for democracy in 1986 brought a radical change to the relationship between employers and workers.
6. The political force of labor in South Korea is so strong that it had managed to push ways up rapidly in the midst of an unprecedented surplus of highly educated labor which normally should depress wages.
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