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Transcript of Hyundai
Global Auto Industry
The Industry in South Korea
Car factory in turkey, 1997
Factory in China & Partnership with GuangZhou Motor group.
Used FDI to develop worldwide key operations
Choose locations based on their advantages
Internalized operations to gain control
Various collaborative ventures for
4th largest world vehicle manufacturer.
Owns 32.8 % of Kia Motors
Operates the world's largest integrated automobile manufacturing facility in Ulsan, with an annual production of 1.6 million units.
Employs about 75,000 people worldwide.
Hyundai Motor Company
South Korea's #1 Car maker
4th Largest in the World
Sells vehicles to 193 countries
About 6000 dealerships and showrooms worldwide.
12 models, plus buses, trucks and commercial vehicles
Producing more than 1 million cars per year
Yearly revenue 100 billion USD
Hyundai Company Group Background
Hyundai's name comes from that means "modernity".
Founded as small construction firm by Chung Ju-yung in 1947.
Started operating outside the country in 1965. Guam, Thailand and Vietnam.
Hyundai Motor Company, founded in 1967; Heavy Industries, in 1973.
In the 80's started exporting their first car, "Excel", to the US.
1983 enter the semiconductor industry
2003 Hyundai's group broke up into 5 independent business.
Brand value: 77 on top 100 in the world
Revenue: 86 billion USA (2013)
Aims to build mutually satisfying long-term relationships with key costumers
Costumers 3 phases:
The task of hiring, training, and motivating employees
Miami Hyundai Training Academy:
Global service advising and warranty training
costumer knowledge, customization, relationship policy
Health Care Benefits, Paid Time Off, Survivor Benefits, Income Protection Benefits, Retirement Benefits, Vehicle Benefits, Wellness
Seeburger Business Integration Server software
has a public website with reports for investors, shareholders has general meetings etc.
“Our mission at Miami Overseas Training Center is to support our Distributors in their Service Operation, improving customer satisfaction, Hyundai brand image, and Dealer profit. Below is a organizational chart for our operations.”
Communication Channels with costumers:
telemarketing, APP, mail, and direct mail.
Total Maintenance Assurance
Road Side Assistance
24x7 Call center
Extended Warranty Program
Concept is based on
In short: Everything in marketing matters
Implementation of marketing programs, processes, and activities that recognize their breadth and interdependency
What has the government done to support Hyundai?
What can the government do to encourage future success at Hyundai?
Consistent with Dinnung’s Electric Paradigm, describe the ownership-specific advantages, location-specific advantages and internalization advantages held by Hyundai.
Which of these advantages do you believe has been most instrumental to the firm’s success?
Substantial industrial cluster
Cost-effective knowledge workers
World center of new technology and development
Korea's governmental cooperation
Korea's high savings rate, Investment > Consumption, and extensive FDI
Korea's participation in Hyundai's success
Ensures available funds and capital.
Promotes raw materials & technology imports
Encourages save & investment
Pushed exports heavily
Industrial structure conducive to innovation
Factors Proportion Theory
Products differ on the type and quantities of factors required for production.
Countries differ in the kind of factors they posses.
Hyundai's National Competitive Advantage
What can the US do for the auto industry
Safety, fuel efficiency & sustainable energy
Cooperation with technology companies
What are the roles of comparative and competitive advantages in Hyundai’s success?
In terms of factor proportions theory, what abundant factors does Hyundai leverage in its worldwide operations?
In what ways does Hyundai’s success contradict the theory?
Discuss Hyundai and its position in the global car industry in terms of the determinants of national competitive advantage.
What is the role of demand conditions; factor conditions; related and supporting industries; and firms strategy, structure, and rivalry to Hyundai’s international success?
The Korean government has been instrumental to Hyundai in terms of national industry policy.
Weakened won = favorable exchange rates w cost suppliers
Access foreign partner's know-how, capital, distribution channels and marketing assets.
Buyer's strength and sophistication demands high-quality, pushes continuous improvement.
The nation's position in factors of production ensures to gain a competitive edge
Presence of substantial industrial cluster.
Hyundai seek out factors
How Hyundai contradicts the theory
Strong focus on export demand
Disregard of the home market
Dinnung's Electric paradigma
3 Different Conditions for successful business in foreign markets:
Factors of production
Export products -> abundant factors of production
Import products -> scarce factors of production
Korean Abundant Factors
Cost-effective knowledge workers
World center of new technology and development
High savings rate & massive inward FDI
Hyundai Assurance program
10-year warranty program
Comparative and Competitive Advantage's ROLE
Allow Hyundai to succeed in such a low demand market, like South Korea.
Help attain the economies of scale lead Hyundai to success, in competitive international markets.
Restriction of FDI
Korea's various competitive advantages in the car industry.
Hyundai successfully targeted world markets, well diversified. U.S sales = 22%
Worldwide inexpensive, high-quality labor from. Ex: factory in China,
Collaborative ventures in R&D, design, manufacturing, and other different activities.
What can Korea do?
Further open up the Korean auto market to more foreign investor
Constant review on policy -> ensure it's competitive for the challenges of the auto-mobile industry
Continue capitalizing on acquired advantages
What can the government in your country do to support development or maintenance of a strong auto industry?
R&D - centers in North America, Japan, and Europe
Technology patents, trademarks, brands & marketing - Hyundai Assurance Program and 10 Year Warranty
Korea’s high inward FDI – lots of capital
Factory in : Turkey – Middle East
China – 20% of Chinese market
Partnership with Guangzhou Motor Group - market in China
Emerging markets – low-cost/high-quality labor
Regional headquarters & R&D centers in Europe, Japan, & North America
Plants in Iran, Taiwan, Vietnam, Venezuela, Alabama (US) and other countries
Heavily invest in value-chain activities.
Uses FDI to develop key operations around the world.
Quality control in each market
Restoring and improving ecosystems
Sharing homes and dreams
Spreading a safer traffic culture
Enhancing mobility and transportation
World capacity for producing cars are 80 million each year, but demand is less
Korea has cost, quality and technology advantages in the world
The Korean economy is denominated by some major firms including Hyundai, Samsung etc.
A generally weak won has made the Korean products cheaper
During 2008's global financial crisis, the automotive sales declined
Profits suffered as a result of excess production capacity as demand fell greatly below capacity
Many auto companies consolidated and divested to reorganize and target world markets to achieve economies of scale
One of the largest and most internationalized business sectors
Other value-adding activities.